Keynesian fiscal stimulus has repeatedly returned during economic crises, from the Great Depression to the financial crisis and COVID. But stimulus paid for through government borrowing has also contributed to a lasting rise in public debt, raising the question of whether the economic payoff has justified the fiscal cost.
Keynesian fiscal stimulus has risen, fallen, and returned as economic crises and new evidence changed how policymakers thought about recession management. After the Great Depression, fiscal policy became a central stabilization tool; later, monetary policy took its place, only for fiscal stimulus to return during the 2008 financial crisis and COVID. Those interventions were largely financed through borrowing, contributing to a ratchet-up in debt-to-GDP ratios that was never fully reversed. With the fiscal cost still accumulating, the central question is whether the economic payoff justified the added debt.
Valerie Ramey
Articles
Where data centers locate to fuel the growth of artificial intelligence (AI) is of burgeoning political importance with economic and environmental implications. We highlight local factors associated with siting and opposition.
November 3, 2026
Event
The Hoover Institution Economic Policy Working Group hosted “Money and Power: Historical Lessons for Stablecoins and U.S Dollar Dominance” with Michael D. Bordo, the Duncan Stewart Distinguished Visiting Fellow at the Hoover Institution.
April 23, 2026
Articles
Synthetic control methods hold the promise of identifying a credible counterfactual by closely reproducing pretreatment outcome paths. Their reliability, however, depends in part on how effectively they constrain researchers’ less-visible degrees of freedom. We explore these methods’ sensitivity by constructing 1440 plausibly defensible specifications to estimate the employment effect of California’s $20 fast-food minimum wage. While over 96 percent of the estimated employment effects are negative, the range is vast, illustrating that synthetic control methods are sensitive to specification choice.
October 30, 2026