Stimulus money and the Chateau of Fontainebleau

Here is an interesting article from the New York Times about how fast France is spending the approved "stimulus money" relative to the US. The reason is that in a country with a large and more centralized system of public investment, there are many more "shovel ready" projects. The project they refer to is the renovation of the Chateau of Fontainebleau (home of one of the two INSEAD campuses). France is hoping to spend 75% of the stimulus money this year, a figure that is much larger than what is currently forecasted for the US. Here is an interesting chart with the evolution of money spent in the American Recovery and Reinvestment Funds. Numbers remain very low from the overall size of the program. The fact that we might see faster implementation of stimulus packages in countries with large governments (such as France) means that these countries not only benefit from strong automatic stabilizers, but they might also be able to be more effective when it comes to the implementation of discretionary fiscal policy measures.

Antonio Fatás