10 October 2011

Keynesian Economics and Military Spending

So there's a study out there that tries to show that military spending has a signficant economic effect beyond the raw dollars committed.

... it turns out that military spending is actually a singularly good proxy for measuring just how big the multiplier for government spending is. A new paper by Jón Steinsson and Emi Nakamura, assistant economics professors at Columbia, looks at boosts in military spending over the past half-century and separates their impacts in states with lots of military contractors and personnel, and those with relatively few—specifically, California and Illinois. The difference allows them to run a regression to see how much the extra military spending boosted the economy.

One reason that military spending was easy to analyze in depth, as the article points out, is that military spending is archived in meticulous - and usually public-accessible - detail.

By: Brant

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