More stimulus spending associated with bigger increases in unemployment?

The simple regression result can be seen here. Robust standard errors are reported.

Data on government expenditures are available from here and here as well as Obama administration's "The Effects of Fiscal Stimulus: A Cross-country Perspective." While some of the Obama administration's estimates of Fiscal Stimulus as a percentage of GDP are questionable, we have used their estimates with the exception of Canada and Sweden. Using the Obama administrations estimated values for those two countries doesn't change the sign of the coefficient, though it does reduce its size to 0.23.

I used the latest unemployment and stimulus spending data to see if the states with the most stimulus dollars had done particularly well on the unemployment front.

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Blogger Mark said...

Are you arguing that there's a positive relationship based on those 13 observations? I'm not seeing it.

10/20/2009 8:45 AM  
Blogger Graham said...

Perhaps the relationship exists but the causality is reversed? Seems reasonable that the government might increase stimulus spending in the face of rising unemployment...

10/20/2009 6:51 PM  

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