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When it comes to fighting recessions, there's a tendency to see "fiscal stimulus" packages as wasteful, as a form of "throwing money at the problem." The critics have a point. But the conclusion that therefore we should do nothing is also wrong. Instead, careful attention should be paid to the details. Just as a family pinched for cash might find borrowing for the purchase of a new car or appliance prudent while taking a vacation in Las Vegas wouldn't be, some government programs to combat recession make sense while others do not.

Three criteria are crucial for evaluating fiscal stimulus packages. First, does the program...  full article