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The fiscal role of conscription in the US World War II effort

  • Siu, Henry

I consider the role of conscription as a fiscal shock absorber in times of war. Conscription of military personnel allows the fiscal authority to minimize wartime government expenditure, and hence, minimize tax distortions associated with war finance. I develop a simple dynamic general equilibrium model to articulate this view, and calibrate the model to mimic the U.S. World War II experience. Analysis of the calibrated model indicates that the value of conscription as a fiscal policy tool is quantitatively large.

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File URL: http://microeconomics.ca/henry_siu/draft0804.pdf
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Paper provided by Vancouver School of Economics in its series Economics working papers with number siu-06-04-26-12-42-20.

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Length: 0 pages
Date of creation: 26 Apr 2006
Date of revision: 26 Apr 2006
Handle: RePEc:ubc:bricol:siu-06-04-26-12-42-20
Contact details of provider: Web page: http://www.economics.ubc.ca/

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  1. Ellen R. McGrattan & Lee E. Ohanian, 2006. "Does Neoclassical Theory Account for the Effects of Big Fiscal Shocks? Evidence From World War II," NBER Working Papers 12130, National Bureau of Economic Research, Inc.
  2. Robert E. Lucas Jr. & Nancy L. Stokey, 1982. "Optimal Fiscal and Monetary Policy in an Economy Without Capital," Discussion Papers 532, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Casey Mulligan & Andrei Shleifer, . "Conscription as Regulation," Working Paper 19486, Harvard University OpenScholar.
  4. Alan B. Krueger & Joshua D. Angrist, 1989. "Why do World War II Veterans Earn More Than Nonveterans?," NBER Working Papers 2991, National Bureau of Economic Research, Inc.
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  11. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1.
  12. Joines, Douglas H, 1981. "Estimates of Effective Marginal Tax Rates on Factor Incomes," The Journal of Business, University of Chicago Press, vol. 54(2), pages 191-226, April.
  13. Barro, Robert J., 1979. "On the Determination of the Public Debt," Scholarly Articles 3451400, Harvard University Department of Economics.
  14. Harold L. Cole & Lee E. Ohanian, 2001. "New Deal policies and the persistence of the Great Depression: a general equilibrium analysis," Working Papers 597, Federal Reserve Bank of Minneapolis.
  15. Ross, Thomas W, 1994. "Raising an Army: A Positive Theory of Military Recruitment," Journal of Law and Economics, University of Chicago Press, vol. 37(1), pages 109-31, April.
  16. Gordon, Robert J, 1969. "$45 Billion of U.S. Private Investment Has Been Mislaid," American Economic Review, American Economic Association, vol. 59(3), pages 221-38, June.
  17. Fisher, Anthony C, 1969. "The Cost of the Draft and the Cost of Ending the Draft," American Economic Review, American Economic Association, vol. 59(3), pages 239-54, June.
  18. Siu, Henry E., 2004. "Optimal fiscal and monetary policy with sticky prices," Journal of Monetary Economics, Elsevier, vol. 51(3), pages 575-607, April.
  19. Altman, Stuart H & Barro, Robert J, 1971. "Officer Supply-The Impact of Pay, the Draft, and the Vietnam War," American Economic Review, American Economic Association, vol. 61(4), pages 649-64, September.
  20. Kenneth L. Judd, 1982. "Redistributive Taxation in a Simple Perfect Foresight Model," Discussion Papers 572, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  21. Chari, V V & Christiano, Lawrence J & Kehoe, Patrick J, 1991. "Optimal Fiscal and Monetary Policy: Some Recent Results," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(3), pages 519-39, August.
  22. R. Anton Braun & Ellen R. McGrattan, 1993. "The Macroeconomics of War and Peace," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 197-258 National Bureau of Economic Research, Inc.
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