Government spending on military boosts economies, especially in advanced countries.
The article explores how government spending affects a country's economy by looking at military spending in different countries. They found that for every dollar spent by the government, the economy grows by about 80 cents in the first year. The impact peaks at 86 cents two years after the spending. The effects vary depending on the country's economic situation, with advanced economies seeing bigger boosts. Negative shocks, fixed exchange rates, and closed economies also lead to larger economic growth from government spending. The study also considers scenarios where the military-spending method may not work as well, showing different possible outcomes.