We are pleased to announce a new blog post on the SUARA SEACEN Blog:
Bullets and budgets: Measuring defense spending multipliers
by Joao Jalles, John Beirne, and Donghyun Park
We are pleased to announce the latest blog post on Suara SEACEN:
This column examines the macroeconomic effects of defense spending shocks, with a focus on emerging and developing economies. Using cyclically adjusted defense shocks and a local projections framework for a global sample over the period 1990 to 2023, we estimate that defense shocks yield modest but persistent effects on output, with multipliers of around 0.7% to 1% after 8 years. Where defense expansions generate persistent demand pressures, monetary authorities need to carefully assess whether the resulting stimulus is consistent with price stability.
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