Who benefits from increased government spending? A state-level analysis Academic Article uri icon


  • We simultaneously identify two government spending shocks: military spending shocks as defined by Ramey (2011) and federal spending shocks as defined by Perotti (2008). We analyze the effect of these shocks on state-level personal income and employment. We find regional patterns in the manner in which both shocks affect state-level variables. Moreover, we find differences in the propagation mechanisms for military versus non-military spending shocks. The former benefits economies with larger manufacturing and retail sectors and states that receive military contracts. While non-military shocks also benefit states with the proper industrial mix, they appear to stimulate economic activity in lower-income states. 2013 Elsevier B.V.

published proceedings

  • Regional Science and Urban Economics

author list (cited authors)

  • Owyang, M. T., & Zubairy, S.

citation count

  • 21

complete list of authors

  • Owyang, Michael T||Zubairy, Sarah

publication date

  • January 2013