Rearmament to the Rescue? New Estimates of the Impact of ‘Keynesian’ Policies in 1930s’ Britain

Nicholas Crafts and Terence C. Mills

No 270531, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We report estimates of the fiscal multiplier for interwar Britain based on quarterly data, time-series econometrics, and ‘defense news’. We find that the government expenditure multiplier was in the range 0.3 to 0.8, much lower than previous estimates. The scope for a Keynesian solution to recession was less than is generally supposed. We find that rearmament gave a smaller boost to real GDP than previously claimed. Rearmament may, however, have had a larger impact than a temporary public works program of similar magnitude if private investment anticipated the need to add capacity to cope with future defense spending.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 43
Date: 2013
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Citations: View citations in EconPapers (41)

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Related works:
Journal Article: Rearmament to the Rescue? New Estimates of the Impact of “Keynesian” Policies in 1930s' Britain (2013)
Working Paper: Rearmament to the Rescue? New Estimates of the Impact of ‘Keynesian’ Policies in 1930s’ Britain (2013)
Working Paper: Rearmament to the Rescue? New Estimates of the Impact of ‘Keynesian’ Policies in 1930s’ Britain (2012)
Working Paper: Rearmament to the Rescue? New Estimates of the Impact of ‘Keynesian’ Policies in 1930s’ Britain (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:270531

DOI: 10.22004/ag.econ.270531

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