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Stimulus on the Home Front: The State-Level Effects of WWII Spending

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  • Gillian Brunet

    (Smith College)

Abstract

I use newly digitized contract data on U.S. war production spending over 1940–1945 to analyze the macroeconomic effects of U.S. military spending in World War II. I find personal income multipliers of 0.34 over two years and 0.49 over three years. Personal income multipliers may substantially understate gross domestic product multipliers, perhaps by as much as 50%. Employment estimates imply costs per job-year over the same time horizons of $405,013 and $232,268 in 2015 dollars, suggesting job creation was limited. I also find evidence of negative scale effects: larger positive spending shocks are associated with systematically smaller multiplier estimates.

Suggested Citation

  • Gillian Brunet, 2026. "Stimulus on the Home Front: The State-Level Effects of WWII Spending," The Review of Economics and Statistics, MIT Press, vol. 108(3), pages 628-644, May.
    • Handle: RePEc:tpr:restat:v:108:y:2026:i:3:p:628-644
    DOI: 10.1162/rest_a_01432
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