The Scope of Econmomics

HAMILTON

PROJECT

Strategy PaPer

January 2008 reviSed verSion

TH E

If, When, How: A Primer on Fiscal Stimulus

Douglas W. Elmendorf and Jason Furman

the Hamilton Project seeks to advance america’s promise of opportunity, prosperity, and growth. the Project’s economic strategy reflects a judgment that long-term prosperity is best achieved by making economic growth broad-based, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments. our strategy—strikingly different from the theories driving economic policy in recent years—calls for fiscal discipline and for increased public investment in key growthenhancing areas. the Project will put forward innovative policy ideas from leading economic thinkers throughout the united States—ideas based on experience and evidence, not ideology and doctrine—to introduce new, sometimes controversial, policy options into the national debate with the goal of improving our country’s economic policy. the Project is named after alexander Hamilton, the nation’s first treasury secretary, who laid the foundation for the modern american economy. Consistent with the guiding principles of the Project, Hamilton stood for sound fiscal policy, believed that broad-based opportunity for advancement would drive american economic growth, and recognized that “prudent aids and encouragements on the part of government” are necessary to enhance and guide market forces.

HAMILTON

PROJECT

TH E

Advancing Opportunity, Prosperity and Growth

Printed on recycled paper.

HAMILTON

PROJECT

TH E

If, When, How: A Primer on Fiscal Stimulus

Douglas W. Elmendorf

Brookings Institution

Jason Furman

Brookings Institution

Revised Version

JanuaRy 2008

The views expressed in this strategy paper are those of the authors and are not necessarily those of The Hamilton Project advisory Council or the trustees, officers, or staff members of the Brookings...