The Regional Economic Effects of Military Base Realignments and Closures

This paper empirically investigates the impact of military base realignments and closures on regional economic activity in light of the 2005 round of Base Realignment and Closure actions. Baseline regressions with county-level data show employment multipliers comparable to those generated from conventional input–output models. However, controlling for possible endogeneity and other regional-specific factors, regressions indicate more tenuous results for spillover effects from the military to the private sector. Only the contractor type of base employment generated economically and statistically meaningful impacts on local employment. In addition, there is strong evidence of asymmetric effects between military buildups and drawdowns.     

The Keynesian IS-MR Model and Military Spending

The issue of guns or butter is one of the most fundamental economic questions, yet there is no consensus on a theoretical framework for examining it. Over the last decade, a version of a simple Keynesian macroeconomic model has been applied a number of times to examining the link between defence spending and economic growth in a range of countries. There are reasons for doubting the soundness of this model as a basis for empirical work.