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Reassessing the Cross‐Sectional Fiscal Multiplier: Evidence From U.S. Defense Procurement, 1966–2019

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  • Gianluca Pallante

Abstract

This paper revisits the empirical analysis of Nakamura and Steinsson (2014). I reconstructed and extended the original dataset to cover the period 1966–2019, harmonizing two major sources of data: the Defense Contract Action Data System (DCADS) and USAspending.gov. I discuss how to aggregate these contract‐level data to better capture spending more directly tied to domestic stimulus. Estimated multipliers are slightly lower in narrow replications but increase when incorporating later fiscal episodes. I also assess the validity and stability of cross‐sectional estimates. While some heterogeneity exists, dispersion in state‐level responses remains within reasonable boundaries, especially when accounting for dynamic persistence.

Suggested Citation

  • Gianluca Pallante, 2026. "Reassessing the Cross‐Sectional Fiscal Multiplier: Evidence From U.S. Defense Procurement, 1966–2019," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 41(5), pages 718-726, August.
    • Handle: RePEc:wly:japmet:v:41:y:2026:i:5:p:718-726
    DOI: 10.1002/jae.70058
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