Will Obama's economic stimulus package be effective? Evidence from the misery index

Abstract

We apply Lagrange Multiplier (LM) unit root tests with one and two structural breaks to the US misery index. The results indicate that aggregate demand shocks, such as the economic stimulus package passed by the Congress in 2009, will only have a temporary effect on the long-run growth path of the misery index. The implication is that the benefits of the Obama package in terms of initiating recovery from the Global Financial Crisis will only be transitory. © 2011 Taylor & Francis.