Was US unemployment lower with the 2009 stimulus than it would have been without it? Did the benefits outweigh the costs? These are such important questions that our friends at Boothâ€™s Initiative on Global Markets decided to ask them a second time to their Economic Experts Panel, after first posing them in 2012.
The controversial American Recovery and Reinvestment Act (ARRA) of 2009, signed into law by President Barack Obama less than a month into his first term, was passed by the House of Representatives without Republican support and with just a few GOP votes in the Senate. But however divisive a bill, and however low a bar there was for improvement in the economy (as Anil Kashyap of Chicago Booth points out in his comments) the panelists by and large agreed that it made a positive impact on unemployment. This attitude didnâ€™t change much from 2012 to 2014, but the â€œstrongly agreeâ€ camp did grow by 10 percentage points in that time. (The panel did gain and lose a few members between the polls, and their contributions did affect the second vote on both issues.)
Did anyone change views on unemployment? Just one—Alberto Alesina of Harvard, who in 2012 said he thought the ARRA was good for unemployment, and this week reversed his opinion (unfortunately, without explanation). The other notable change was Kenneth Judd of Stanford, who â€œagreedâ€ this week but in 2012 said he was uncertain because â€œthere has been no serious study of this.â€
The cost-benefit question, meanwhile, has received serious attention from Ray Fair of Yale, whose paper on the subject suggests itâ€™s â€œabout a wash.â€ His Yale colleague Larry Samuelson wasnâ€™t satisfied in 2012, and isnâ€™t satisfied now, however. â€œThis is too complicated a cost-benefit problem to assess. I think the ARRA was a good idea, but this reflects faith rather than analysis,â€ he said.
Like Fair and Samuelson, Robert Shimer of the University of Chicago registered â€œuncertainâ€ this week as well as in 2012. Shimer did acknowledge, however, that lawmakers were in a tight spot no matter what they did.
â€œIt would have been difficult to do nothing,â€ he said.