Growing Alaska's economy.

• Position: Alaska Trends

American Recovery and Reinvestment Act (ARRA) is a fiscal stimulus package used to facilitate investments and generate job creation in the American economy, fashioned after the economic downturn in 2008. The rationale behind such fiscal measures derives from a Keynesian theory that government spending should be used to cover the GDP gap (the difference between potential and actual gross domestic product) under certain economic conditions. In general, modern macroeconomists suggest that such fiscal tools should be reserved until after monetary adjustment strategies have been exhausted.

The graph illustrates the distribution of funding received by the State under the American Recovery and Reinvestment Act of 2009 (ARRA).

As of Dec. 31,2009, the State of Alaska has received $861 million in reportable funds. The breakdown of long-term expenditures reveals that the majority of federal stimulus spending will be focused on infrastructure development and education. As of the last report in December, only 9 percent of allocated (reportable) funds had been spent. And of that 9 percent spent during the first quarter of 2010, 75 percent was allocated toward the Transportation and Public Facilities sector. Interestingly, the majority of job creation for that quarter was created in Education and Early Development, accounting for 276 (48 percent)jobs. Conversely, Transportation and Public Facilities generated a...