Congressional Budget Office Says Unemployment Benefits Have Strongest Stimulative Effect

Date Published: 
Fri, 01/01/2010

Congressional Budget Office. January 2010. 

Policies for Increasing Economic Growth and Employment in 2010 and 2011” takes a look at the unemployment rate following the Great Recession and makes suggestions regarding which policies will alleviate the problem. When considering policy options with the quickest turn around, CBO suggests extended unemployment benefits as one of the strongest options.

This is largely because unemployment benefits tend to be spent very quickly, offering immediate stimulus. “CBO estimates that [UI] would raise output cumulatively between 2010 and 2015 by $0.70 to $1.90 per dollar of total budgetary cost”—a higher payoff than any of the other policies considered.