IDEAS home Printed from https://ideas.repec.org/a/cup/jechis/v82y2022i3p727-764_4.html

Can Stimulating Demand Drive Costs Down? World War II as a Natural Experiment

Author

Listed:
  • Lafond, François
  • Greenwald, Diana
  • Farmer, J. Doyne

Abstract

U.S. military production during World War II increased at an impressive rate and led to large declines in unit costs. However, the literature has focused on elucidating detailed mechanisms behind this relationship, using small datasets on specific products. Here we take a step back and, looking at an unprecedently large collection of data, we show that both exogenous technological progress and endogenous effects from increasing production experience were important, in roughly similar proportions. The demand for military products was largely exogenous, and the correlation between production, cumulative production, and time was weak, limiting issues of reverse causality and multicollinearity.

Suggested Citation

  • Lafond, François & Greenwald, Diana & Farmer, J. Doyne, 2022. "Can Stimulating Demand Drive Costs Down? World War II as a Natural Experiment," The Journal of Economic History, Cambridge University Press, vol. 82(3), pages 727-764, September.
    • Handle: RePEc:cup:jechis:v:82:y:2022:i:3:p:727-764_4
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0022050722000249/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wolff Guntram B. & Steinbach Armin & Zettelmeyer Jeromin, 2025. "The Governance and Funding of European Rearmament," Intereconomics: Review of European Economic Policy, Sciendo, vol. 60(4), pages 210-214.
    2. Lafond, François, 2025. "Forecasting technological progress," INET Oxford Working Papers 2025-10, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, revised Dec 2025.
    3. Ethan Ilzetzki, 2024. "Learning by Necessity: Government Demand, Capacity Constraints, and Productivity Growth," American Economic Review, American Economic Association, vol. 114(8), pages 2436-2471, August.
    4. Torsten Heinrich & Jangho Yang, 2022. "Innovation in times of Covid-19," Papers 2212.14159, arXiv.org.
    5. Torsten Heinrich & Jangho Yang, 2022. "Innovation in times of Covid-19," Chemnitz Economic Papers 058, Department of Economics, Chemnitz University of Technology.
    6. Singh, Anuraag & Triulzi, Giorgio & Magee, Christopher L., 2021. "Technological improvement rate predictions for all technologies: Use of patent data and an extended domain description," Research Policy, Elsevier, vol. 50(9).
    7. Alexandre Chirat & Basile Clerc, 2025. "A “Climate War Economy”? Medium-run Macroeconomic Disequilibrium of the Green Transition," Working Papers 2025-10, CRESE.
    8. Heinrich, Torsten & Yang, Jangho, 2022. "Innovation in times of Covid-19," MPRA Paper 115809, University Library of Munich, Germany.
    9. Ward, S.H. & Lopes Cardozo, N.J., 2025. "Value-led fusion technology: A framework for guiding fusion commercialisation strategy," Energy Policy, Elsevier, vol. 203(C).
    10. Aleksandar Keseljevic & Stefan Nikolic & Rok Spruk, 2025. "Ethnic Conflicts, Civil War and Economic Growth: Region-Level Evidence from former Yugoslavia," Papers 2505.02431, arXiv.org.
    11. Anuraag Singh & Giorgio Triulzi & Christopher L. Magee, 2020. "Technological improvement rate estimates for all technologies: Use of patent data and an extended domain description," Papers 2004.13919, arXiv.org.

    More about this item

    JEL classification:

    • N62 - Economic History - - Manufacturing and Construction - - - U.S.; Canada: 1913-
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    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:cup:jechis:v:82:y:2022:i:3:p:727-764_4. 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: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jeh .

    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.