Local Fiscal Multipliers and Fiscal Spillovers in the United States

NBER Working Paper No. 25457

Issued in January 2019

NBER Program(s):Economic Fluctuations and Growth, Public Economics



We estimate local fiscal multipliers and spillovers for the United States using a rich dataset based on U.S. Department of Defense contracts and a variety of outcome variables relating to income and employment. We find strong positive spillovers across locations and industries. Both backward linkages and general equilibrium effects (e.g., income multipliers) contribute to the positive spillovers. Geographical spillovers appear to dissipate fairly quickly with distance. Our evidence points to the relevance of Keynesian-type models that feature excess capacity.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25457