  I devise a novel approach to evaluate the effectiveness of fiscal policy in
the short run with multi-category treatment effects and inverse probability
weighting based on the potential outcome framework. This study's main
contribution to the literature is the proposed modified conditional
independence assumption to improve the evaluation of fiscal policy. Using this
approach, I analyze the effects of government spending on the US economy from
1992 to 2019. The empirical study indicates that large fiscal contraction
generates a negative effect on the economic growth rate, and small and large
fiscal expansions realize a positive effect. However, these effects are not
significant in the traditional multiple regression approach. I conclude that
this new approach significantly improves the evaluation of fiscal policy.
