Demand Stimulus as Social Policy.

We exploit a panel of city-level data with rich demographic information to estimate the distributional effects of Department of Defense spending and its effects on a range of social outcomes. The income and employment generated by defence spending accrue predominantly to households without a bachelo...

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Published in:Review of Economic Studies Vol. 93; no. 4; pp. 2313 - 2348
Main Authors: Auerbach, Alan J, Gorodnichenko, Yuriy, Murphy, Daniel
Format: Article
Published: Oxford University Press / USA Jul2026
Subjects:
Online Access:View this record in EBSCOhost
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      dt: Jul2026
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      pub: Oxford University Press / USA
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        10.1093/restud/rdaf096
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        atl: Demand Stimulus as Social Policy.
      aug:
        au:
          Auerbach, Alan J
          Gorodnichenko, Yuriy
          Murphy, Daniel
        affil:
          UC Berkeley and NBER, USA
          UC Berkeley, CEPR and NBER, USA
          University of Virginia Darden School of Business, USA
      su:
        United States. Dept. of Defense
        Social indicators
        Labor supply
        Health insurance
        Home ownership
        Demographic change
        Income distribution
        Military spending
        Poverty reduction
      sug:
        subj:
          Social indicators
          Labor supply
          Health insurance
          Home ownership
          Demographic change
          Income distribution
          United States. Dept. of Defense
          Direct group life, health and medical insurance carriers
          Direct individual life, health and medical insurance carriers
          Temporary Help Services
          Military spending
          Poverty reduction
      keyword:
        copyrightHolder:Review of Economic Studies Ltd
        copyrightYear:2026
        E62
        Fiscal policy
        H56
        Inequality
        inLanguage:en
        publisher:Oxford University Press
        sameAs:https://dx.doi.org/10.1093/restud/rdaf096
        Social policy
        copyrightHolder:Review of Economic Studies Ltd
        copyrightYear:2026
        E62
        Fiscal policy
        H56
        Inequality
        inLanguage:en
        publisher:Oxford University Press
        sameAs:https://dx.doi.org/10.1093/restud/rdaf096
        Social policy
      ab: We exploit a panel of city-level data with rich demographic information to estimate the distributional effects of Department of Defense spending and its effects on a range of social outcomes. The income and employment generated by defence spending accrue predominantly to households without a bachelor's degree. These households as well as Black and Hispanic households tend to disproportionately benefit from this spending. Defence spending also promotes a range of beneficial social outcomes that are often targeted by government programs, including reductions in poverty, divorce rates, disability rates, and mortality rates, as well as increases in homeownership rates, health insurance rates, and occupational prestige. We compare the effects of defence spending with the effects of general demand shocks and explore reasons for the differential effects of the shocks.
      pubtype: Academic Journal
      doctype: Article
      src: R
    language: English
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