Local Effects of a Military Spending Shock: Evidence from Shipbuilding in the 1930s

Christopher Biolsi

Review of Economic Dynamics, 2019, vol. 32, 227-248

Abstract: Using novel county-level data on shipbuilding contracts awarded during the Great Depression by the federal government, I estimate a local government spending multiplier. Manufacturing output, value added, employment, and average earnings all rise significantly in counties receiving naval spending. Contracts worth 12 percent of lagged output generate an extra 1.9 percentage points of manufacturing output growth over the following two years. The effects grow over time, and spillovers are estimated to be positive. Household survey data suggests that consumption rises at the household level. (Copyright: Elsevier)

Keywords: Multiplier; Government spending; Great Depression (search for similar items in EconPapers)
JEL-codes: E62 E63 E65 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.red.2018.10.005

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