gauti eggertson -

fiscal policy has its most significant effects in not what it actually does to the economy, but for altering the deflationary expectations of market participants. FDR's New Deal spending happened with considerable lag, however, the economic upturn coincided with his credible commitment to raising the rate of inflation in the economy, thus generating negative real interest rates, as well as changing expectations of permanent income, thus increasing current consumption.

question : this change was at that time "unanticipated," a complete regime change. to what extent is the upcoming fiscal stimulus already factored in by market participants?