Government spending and the Great Recession

In this paper government spending during the Great Recession is examined. A measure of full-employment government spending was estimated by representing the economy with a Keynesian model. The empirical evidence reveals that government spending has been systematically below its full-employment level during the Great Recession and through 2012. Rather than a runaway expansion in government spending, findings indicate a government spending shortfall from the first quarter of 2008 through the first quarter of 2012.