Did the States Pocket the Obama-Stimulus Money? Lessons from Cross-Section Regression and Interviews with State Officials

Abstract

This paper deploys cross-section regressions and open-ended interviews to assess the impact of grants to the states under the Obama stimulus (ARRA) of 2009-2011. Contrary to John Taylor and John Cogan (Taylor 2011a, b; Cogan and Taylor 2012), who conclude that the states saved rather than spent the grants, we estimate that approximately two-thirds of every ARRA dollar was spent by the states and one-third saved.