Fiscal Multipliers in Advanced and Developing Countries: Evidence from Military Spending Fiscal Multipliers in Advanced and Developing Countries: Evidence from Military Spending

By Viacheslav Sheremirov and Sandra Spirovska

To study the effects of fiscal policy in different economic environments, the authors compile a novel dataset containing output, government spending, military spending, unemployment rates, trade shares, and many other variables for 129 advanced and developing countries during the period 1988–2013. They estimate fiscal multipliers by using military-spending shocks as an instrument for government spending. The data enable them to differentiate between the multipliers in different states of the economy and the business cycle, in different exchange-rate regimes, and at different degrees of openness to trade, as well as in advanced and developing countries.

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