Corpus ID: 59945898

Defense spending and fiscal multipliers: it's all in the variance

@inproceedings{RodrguezLpez2018DefenseSA,
  title={Defense spending and fiscal multipliers: it's all in the variance},
  author={Jes{\'u}s Rodr{\'i}guez-L{\'o}pez and Mario Solis-Garcia},
  year={2018}
}
We provide estimates of U.S. government expenditure multipliers for defense and non-defense spending over 1939-2014, using a fairly standard DSGE model that includes anticipated military spending changes ("war news shocks"), and find the following. First, our model's war news shocks compare favorably to Ramey's (2011) narrative-based "defense news" shocks. Second, war news shocks have little effect on model variables regardless of the period under examination. Unanticipated military expenditure… CONTINUE READING

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