Assessing the Macro Economic Impact of Fiscal Stimulus 2008

The president and Congress are quickly coalescing around a fiscal stimulus plan to shore up the flagging economy. As currently envisioned, the plan is expected to cost at least $150 billion and include a sizable tax rebate, short-term tax incentives for business investment, and temporary increases in unemployment insurance benefits and food stamps. This stimulus will not prevent a recession if one is already on its way, as its benefits will not be realized until summer; however, it could substantially mitigate the severity of any downturn.