The Economic Perspective: “Gauging the Size of the Stimulus”

Mary:  This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program looks at efforts to gauge the size of the stimulus.  Mike, although there has been widespread support for another stimulus to help the economy during the pandemic, there have been debates about the size of the monetary help.  Is there any way to calibrate the needed size of the financial amount of the stimulus?

 

Mike:  Summary Answer

  • From an economic viewpoint, want size of stimulus to equal the gap in economic activity caused by the pandemic
  • Various ways to do this – look at reduction in aggregate production – lost income due to higher unemployment
  • The $900 billion new stimulus equals 4% of annual economic production
  • Is in line with current estimated gap
  • But begs a further question – who gets the funds, and how distributed
  • I’m MW

 

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.