A Mighty Stimulus

wpa-alabamaI’m going to be a bit more wonky than usual because I’m going to be making the case that we may need a bigger stimulus package that either the Democratic party or Republican party may be prepared to pass.  Right now, it appears the only thing that will get by the Senate right is a package of extended unemployment benefits.  I’m going to have to use two concepts that are extremely important to fiscal policy that make all undergraduate students tremble.  The first is the concept of a fiscal policy multiplier.  The second has to do with sorting through labor markets to get at more than just the unemployment rate to find possible ‘automatic stabilizers’.   Both are tedious exercises in basic economics.  Both have never been so significant as now due to some structural changes in the U.S. economy since the 1980s.

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