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Does Stimulus Spending Work?

After the housing bubble burst, both the Bush and Obama administrations turned to stimulus spending in an effort to improve U.S. economic growth. Stimulus spending is often justified by the thought that it is the government’s role to provide jobs in the economy. Yet the idea that the government can create jobs only looks at half the picture, and as Professor Antony Davies explains, there is no compelling evidence that stimulus spending leads to economic growth.

Following the bursting of the housing bubble both the Bush and Obama administrations attempted to jump-start the economy with stimulus spending. Stimulus spending is often accompanied by the phrase

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4 Comments

  1. EnlightenedOne

    Except that our inflation rate remained almost completely static during that time period implying that the last 3 years of stimulus spending actually was helping curb a deflationary state. Which in turn would cost even more jobs.

  2. supersonicsixteen

    Producing more goods and services for the same amount of dollars is good too. 

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