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Working Paper 2009-006A Search | View by Year | View by Category | View by Author | View by JEL Code"Who Benefits from Increased Government Spending? A State-Level Analysis"
We simultaneously identify two government spending shocks: military spending shocks as defined by Ramey (2008) and federal spending shocks as defined by Perotti (2008). We analyze the effect of these shocks on state-level personal income and employment. We find regional patterns in the manner in which both shocks affect state-level variables. Moreover, we find differences in the propagation mechanisms for military versus nonmilitary spending shocks. The former benefits economies with larger manufacturing and retail sectors and states that receive military contracts. While nonmilitary shocks also benefit states with the proper industrial mix, they appear to stimulate economic activity in more-urban, lower-income states. Full Text - Acrobat PDF (587k) Notify Me of Updates for:
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