What determines the Employment Impact of Stimulus Spending?:

Abstract: This thesis investigates the factors that influence the employment impact of stimulus spending in the context of the 2009 American Recovery and Reinvestment Act (ARRA). The analysis is based on state-level data and employs interaction terms estimated via OLS/IV. Empirical evidence for a significant positive employment impact of ARRA and two influencing factors is provided: The employment impact is 30% higher in states with a one standard deviation higher level of per capita unemployment and 20% lower in states with a correspondingly higher level of household debt. Other factors such as imports or state debt are not found to have an impact.