Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions

Emi Nakamura and Jón Steinsson

American Economic Review, 104(3), 753-792, March 2014.

The response of output to state-level variation in prime military contract spending results in a local fiscal multiplier estimate of 1.5. This estimate suggests that the aggregate fiscal multiplier is large when monetary policy is unresponsive (e.g., at the zero lower bound).

Vox Article: Does Fiscal Stimulus Work in a Montary Union?

Data and Programs -- Technical Appendix -- Erratum -- How to Get Military Prime Contract Data