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Failure by DesignThe Story behind America's Broken Economy$
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Josh Bivens

Print publication date: 2011

Print ISBN-13: 9780801450150

Published to Cornell Scholarship Online: August 2016

DOI: 10.7591/cornell/9780801450150.001.0001

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The Policy Response to the Great Recession

The Policy Response to the Great Recession

What was done and did it work? (p.30)

(p.29) The Policy Response to the Great Recession
Failure by Design

Josh Bivens

Lawrence Mishel

Cornell University Press

This chapter explores the controversies surrounding the American Recovery and Reinvestment Act, or simply the Recovery Act. The Recovery Act represented the correct assessment by policy makers that the shock absorption provided by the purely mechanical rise in the deficit was not sufficient, even when paired with the interest rate cuts undertaken by the Federal Reserve. So, policy makers rightly aimed to provide an even larger cushion to the economy with the Recovery Act. Despite being premised on exactly the same theory as the rationale for automatic stabilizers, because it had a clear political sponsor (the Obama administration), the Recovery Act became flypaper for criticism of all kinds.

Keywords:   Recovery Act, Recovery Act controversies, Federal Reserve, interest rate cuts, American Recovery and Reinvestment Act, policy responses

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