Now the Hard Work: How to Get the 'Biggest Bang for the Buck' from the Federal Economic Stimulus Package

Tue Feb 17 15:24:38 EST 2009
By Dr. David Harrison

President Obama has signed the $787 billion federal stimulus package, which includes hundreds of billions of dollars for new public investments and tax cuts for business and individuals. Implementing that package will require developing priorities among potential projects. Economics can help by quantifying the likely employment gains from specific programs. To better understand the interrelationships in the economy that lead to job creation, economists have developed models to estimate the employment and other economic impacts of expenditures and other government policies. This paper, by NERA Senior Vice President Dr. David Harrison, provides a brief conceptual overview of where jobs come from -- both directly and through secondary effects. It then describes the factors that can affect the regional job creation arising from a specific project, including both near-term gains and long-term growth potential. It includes an overview of the specific analytical tools that can be used to quantify the employment effects of projects and concluding remarks about the importance of using these tools to determine which projects have the "biggest bang for the buck" both in the near-term and the long-term.