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Abstract I use newly-digitized contract data on U. S. war production spending over 1940-1945 to analyze the macroeconomic effects of U. S. military spending in World War II. I find personal income multipliers of 0. 34 over two years and 0. 49 over three years. Personal income multipliers may substantially understate GDP multipliers, perhaps by as much as 50%. Employment estimates imply costs per job-year over the same time horizons of 405, 013 and 232, 268 in 2015 dollars, suggesting job creation was limited. I also find evidence of negative scale effects: larger positive spending shocks are associated with systematically smaller multiplier estimates.
Gillian Brunet (Mon,) studied this question.
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