This issue of The Takeaway reminds us that not all recessions are the same and that some respond more to government stimulus spending than others.
In the latest issue of The Takeaway, Dr. Yoon Jo, an assistant professor in the Texas A&M University Department of Economics and a research fellow with the Mosbacher Institute for Trade, Economics, and Public Policy, examines the effectiveness of government stimulus spending. Jo observes that recession can result from either a lack of demand or a lack of supply. Using both economic theory and historical data, she finds that we should expect government spending to be more effective in a low-inflation recession than in a high-inflation recession. Jo concludes that understanding the underlying forces driving the state of the economy is crucial for the design of effective economic policy.
You can read more about Jo’s research in “When Is Government Spending More Effective in Stimulating the Economy?”
The Takeaway is a publication of the Mosbacher Institute at the Bush School of Government and Public Service at Texas A&M.