Helms School of Government


Doctor of Philosophy in Public Policy (PhD)


Steven Manley


COVID-19 shock, cash transfers, the Keynesian and monetarist models, fiscal vs. monetary policy, changes in GDP


Economics | Public Affairs, Public Policy and Public Administration


Governments use cash transfers as a fiscal measure to stimulate economic activities during shocks. As COVID-19 continues to ravage economies globally, governments worldwide have responded with fiscal and monetary policies to manage its economic impact. In addition, the U.S government has intervened with direct transfers to provide liquidity to prevent a prolonged shock. However, opinions are divided on the efficacy of the Keynesian stimulus policy to generate enough of a multiplier to stimulate economic activities compared to the monetarist approach. This study analyzes the classical Keynesian model and compares it with the monetarist model to provide insight for policymakers into the stimulus policy outcomes of the Coronavirus Aid Relief and Economic Security (CARES) Act of 2020 and subsequent policies used to manage the COVID-19 shock. This study used a mixed-method research design to collect and analyze relevant data. Monthly time-series data from the Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), and the Federal Reserve Bank (the Fed) from July 2019 to May 2022 of the percentage changes in GDP, disposable personal income (DPI), and personal consumption expenditure (PCE), as well as unemployment rates (UR), interest rates (INT), and inflation rates (IFL) were collected and analyzed. The study uses multiple regression (MR) to empirically examine the variables' relationships to ascertain the model’s short-term efficacy. The evidence in the Keynesian model suggests that DPI, PCE, and UR significantly predicted the percentage change in GDP, whereas, in the monetarist model, UR, INT, and IFL did not substantially predict the change in GDP. The study finds that the Keynesian theory is more practical in managing shocks, but combining both models could yield a more desirable long-term outcome.