Macroeconomics: Fiscal Stimulus Fiscal Policy under the Obama Administration: The pattern of spending and revenues by the federal government in the next 10 years (and even the next 50 years) looks...

Macroeconomics: Fiscal Stimulus

Fiscal Policy under the Obama Administration: The pattern of

spending and revenues by the federal government in the next 10 years (and even

the next 50 years) looks problematic On the other hand, the zero lower bound

on nominal interest rates suggests that conventional monetary policy has

reached its limits The fact that interest rates remain high for many borrowers

in the country suggests there is scope for a fiscal stimulus (and indeed, this

was one justification for the American Recovery and Reinvestment Act of 2009)

Suppose President Obama asks for your advice In particular,

he’d like you to propose one fiscal policy change that you think would be

beneficial to the economy Explain the policy change that you would recommend

and how this change would be financed