The Recovery Act declared by President Obama’s administration was the reaction to 9 percent of unemployment in the United States indicated during the last decade (“Does Stimulus Spending Work?” 2). One of the possible solutions was to implement stimulus spending equal to the $447 billion bill, which was supposed to be spent on school modernization, improvement of transportation infrastructure, and funding teachers in local communities (“Does Stimulus Spending Work?” 2). Nevertheless, stimulus spending was highly criticized for its doubtful effectiveness to create job places and boost the national economy.
According to Robert Barro, a Harvard economist, financial transfers can be effective only when additional economic and social factors are taken into account (Matthews 3). Considering the results of five studies based on the empirical data, three of them concluded the stimulus spending had a positive effect on the economy, while the other two concluded it had not a big effect at all (Matthews 3).
According to the idea expressed by Heather Boushey, the author of the article “Government Spending is Just What Our Economy Needs”, stimulus spending can keep dollars flowing into the local communities what can boost the job market (1). When it comes to a common consensus of analytics and economists, the government initiative to forcefully intervene by means of stimulus spending is considered to be quite an adequate one. Thus, the unemployment rate will be decreased when the demand for goods and services requires hiring more people.
Works Cited
Boushey, Heather. “Government Spending is Just What Our Economy Needs.” U.S.News, http://www.usnews.com/debate-club/does-stimulus-spending-work/government-spending-is-just-what-our-economy-needs. Accessed 31 January 2017.
“Does Stimulus Spending Work?” U.S.News, http://www.usnews.com/debate-club/does-stimulus-spending-work. Accessed 31 January 2017.
Matthews, Dylan. “Did the stimulus work? A review of the nine best studies on the subject.” The Washington Post, https://www.washingtonpost.com/blogs/ezra-klein/post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/gIQAThbibJ_blog.html?utm_term=.a48e1408f5b5. Accessed 31 January 2017.
