In new NBER working paper we read that:
… Using the universe of Palestinian suicide terrorists against Israeli targets between the years 2000 and 2006 we provide evidence on the correlation between economic conditions, the characteristics of suicide terrorists and the targets they attack. High levels of unemployment enable terror organizations to recruit more educated, mature and experienced suicide terrorists who in turn attack more important Israeli targets.
In other words, while the empirical literature does not find much correlation between the stage of the business cycle and the amount of terror, this research tells us that economic downturns seems to produce better abled terrorists (what happens to the less able?). Think about this extension into the government sphere. I’d like to see research address the question of whether stages of the business cycle have an impact on the number of people interested in securing government positions in the US. I suspect that we see more interest (even conditional on more people being available) when times are bad. And would we also expect that the quality of government employment applications (and hires) improves during recessions?
If so, then maybe the government does not wish to be so successful in its stimulus efforts?