Serious economic analysis of the stimulus program

The July 2011 issue of NBER Digest profiles a paper by Dartmouth's James Feyrer and Bruce Sacerdote on how much of an impact the 2009 stimulus package had.  They looked at three different types of stimulus that were allocated to state and local governments: block grants to maintain employment of teachers and police, support to low-income families, and the infamous "shovel ready" infrastructure projects.  They find that that dollars that went to family support and infrastructure were  expansionary whereas the block grants did not create many additional jobs.  (The block grants may have done little more than reduce borrowing or scale down tax increases.)  Their overall results are consistent with Keynesian multipliers in the range of 0.5 to 1.0. 

Although Feyrer and Sacerdote call the results highly expansionary, a reasonable person might interpret the results differently on cost-benefit grounds.  If one includes all three types of stimulus, the authors' net result was one job for every $170k in spending. 

Another recent study by George Mason Professor Jeffrey Eisenach and Kevin Caves, cited in a Forbes blog by Nick Schulz, focuses on the stimulus targeted at expanding rural broadband.  This study focused on three large projects in Kansas, Minnesota and Montana.  The key results: these projects cost $349,234 for each unserved household to get access to broadband (and of course not everyone buys broadband even if they have access).  Presumably some jobs were created as well, but this was not addressed in the study.