I cannot make the link seem to work, but earlier this evening at Noahopinion, he posted on Bad Event Studies, arguing that the supposedly contractionary fiscal policy implied by the sequestration that started after March, 2013, may have provided a bad event study to test the relative strengths of monetary and fiscal policy, particularly market monetarism versus Keynesianism. He proposed various combinations of outcomes, and in the end basically said we do not know because people may have been acting in earlier years on expectations about what was going to be done in 2013 in monetary and fiscal policies. However, throughout, he and all the commenters accept the idea that fiscal policy was contractionary during the year.
This is wrong.
As is so often the case, what was going on at the state and local levels was completely ignored. From June 2009 until the end of 2012, roughly 750,000 government jobs were lost. Of those about 36,000 were at the federal level, while the rest were at the state and local level, with a good 500,000 of them at the local level. Quite a few people in fact noticed during this period that the biggest drag on the economy was this downward pull from coming from the fiscal "policy" of the state and local governments aggregated, which of course is not somthing consciously controlled, and hence we do not think of it as "policy."
In 2013, all that changed. In February, local governments began to hire and by midyear state governments did also. I was only able to get numbers on this from a Washington Times report of all places in September, which drew on BLS numbers I could not find, but they reported that the combined increase in employment by the two together from February through August was 74,000. Given that housing prices have continued to rise since then and they play a major role in this, it is near certain that this number was higher by the end of 2013.
I did find from a BLS report in December the total of federal government jobs lost for the year through November. That was 92,000 and can be blamed on the sequester. Looks like pretty much of a wash.
So, the bottom line is that looking at fiscal policy in its entirety for 2013, it was neither stimulative nor contractionary. The contraction coming from the federal sequester appears to have been about offset by expansion at the state and local levels. There is simply no way to use 2013 to test any of this for this reason.