EconPapers    
Economics at your fingertips  
 

A Local-Spillover Decomposition of the Causal Effect of U.S. Defense Spending Shocks

Timothy Conley, Bill Dupor, Mahdi Ebsim, Jingchao Li and Peter McCrory

No 2020-014, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper decomposes the causal effect of government defense spending into: (i) a local (or direct) effect, and (ii) a spillover (or indirect) effect. Using state-level defense spending data, we show that a negative cross-state spillover effect explains the existing simultaneous findings of a low aggregate multiplier and a high local multiplier. We show that enlisting disaggregate data improves the precision of aggregate effect estimates, relative to using aggregate time series alone. Moreover, we compare two-step efficient GMM with two alternative moment weighting approaches used in existing research.

Keywords: local-spillover decomposition; GMM; fiscal multipliers (search for similar items in EconPapers)
JEL-codes: E00 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2020-06-16
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/2020/2020-014.pdf Full Text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:88187

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2020.014

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().

 
Page updated 2025-03-31
Handle: RePEc:fip:fedlwp:88187