Download or read book Did the American Recovery and Reinvestment Act (ARRA) Fund an Optimal Mix of Tax Reductions and Direct Government Spending? written by L. Jan Reid and published by . This book was released on 2015 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The American Recovery and Reinvestment Act (ARRA) was passed in response to widespread fears that that United States was in danger of slipping into a 1930s-style economic depression. Once the ARRA was introduced, the economic debate centered on tax reductions versus direct government spending. Old arguments resurfaced about the effectiveness of the Roosevelt New Deal, the 1936-1938 recession, and the theoretical views of both Keynesian and neoclassical economists. I briefly review the economic literature and discuss the economic arguments of both sides.My research accounts for economic adjustment, and seeks to calculate the optimal mix of tax reductions and direct government spending using three different standards: effect on Real Gross Domestic Product, effect on the stock market , and effect on the U.S. civilian unemployment rate.I found that ARRA did not fund an optimal mix of tax reductions and direct government spending because ARRA included subsidies to individual states, loan guarantees, and other subsidies.