Alan Auerbach, Yuriy Gorodnichenko, Daniel Murphy, 04 April 2019

The strength of fiscal multipliers and spillovers have been the subject of intense debate in recent years.Using data on US Department of Defense contracts and income and employment outcomes, this column finds evidence of  strong positive spillovers across locations and industries, although the geographical spillovers appear to dissipate fairly quickly with distance. Both backward linkages and general equilibrium effects contribute to the positive spillovers.

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