Have Stimulus Policies Historically met the ‘Timely, Targeted, and Temporary’ Principle?

Andrea O’Sullivan, Jason E Taylor

Research output: Contribution to journalArticlepeer-review


President Barack Obama noted that fiscal stimulus polices should follow three T’s—timely, targeted, and temporary. This paper examines the government’s fiscal response to eleven postwar recessions in light of the three T’s. We find that the record is mixed at best. On average it took 10.9 months before a recession’s start and the first major countercyclical fiscal policy action. Additionally, in half of the eight recessions in which fiscal policy was attempted, the level of real per capita government spending was nearly three times its trend level four years after the recession was over—i.e. the stimulus was not temporary. Finally, with respect to targeted, while some countercyclical policies have been designed to help sectors that were particularly harmed during a recession, we find many cases whereby recessions provided politicians an avenue in which to implement policies that were part of their long-run reform agenda rather than being carefully targeted countercyclical fiscal policy.
Original languageEnglish
Pages (from-to)143-179
JournalEssays in Economic & Business History
Issue number2
StatePublished - Jun 17 2017


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