IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v115y2025i7p2376-2413.html
   My bibliography  Save this article

The Long-Run Effects of Government Spending

Author

Listed:
  • Juan Antolin-Diaz
  • Paolo Surico

Abstract

Military spending has large and persistent effects on output because it shifts the composition of public spending toward R&D. This boosts innovation and private investment in the medium term and increases productivity and GDP at longer horizons. Public R&D expenditure stimulates economic activities beyond the business cycle even when it is not associated with war spending. In contrast, the effects of public investment are shorter-lived, while public consumption has a modest impact at most horizons. We reach these conclusions using BVAR with long lags and 125 years of US data, including newly reconstructed series of government spending by main categories since 1890.

Suggested Citation

  • Juan Antolin-Diaz & Paolo Surico, 2025. "The Long-Run Effects of Government Spending," American Economic Review, American Economic Association, vol. 115(7), pages 2376-2413, July.
  • Handle: RePEc:aea:aecrev:v:115:y:2025:i:7:p:2376-2413
    DOI: 10.1257/aer.20231278
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20231278
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    File URL: https://doi.org/10.3886/E198830V1
    Download Restriction: no

    File URL: https://www.aeaweb.org/articles/materials/23477
    Download Restriction: no

    File URL: https://www.aeaweb.org/articles/materials/23478
    Download Restriction: no

    File URL: https://libkey.io/10.1257/aer.20231278?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:115:y:2025:i:7:p:2376-2413. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.