Granese, A. and Pistoresi, B. and Salsano, F. (2024) Post-WWII redistribution in the US: the role of the boom cycle. Working Paper. Birkbeck Centre for Applied Macroeconomics, London, UK. (Unpublished)
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Abstract
This paper explores the impact of wartime military spending on postwar U.S. fiscal policy, with a particular focus on the “ratchet effect” in taxes and transfers. Through econometric analysis, we investigate how changes in defense spending during and after conflicts shape long-term federal transfer and tax policies, emphasizing the asymmetric influence of economic growth cycles on defense budgets. Our findings challenge conventional perspectives, showing that economic booms reinforce the fiscal structures established in wartime, resulting in sustained increases in federal transfers and tax revenues. Conversely, during economic downturns, we observe a “reverse ratchet” effect, where increases in defense spending lead to higher transfers and decreased revenues, as fiscal resources are reallocated to stabilize household incomes.
Metadata
| Item Type: | Monograph (Working Paper) |
|---|---|
| Additional Information: | BCAM Working Paper #2404. ISSN: 1745-8587 |
| School: | Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School |
| Research Centres and Institutes: | Applied Macroeconomics, Birkbeck Centre for |
| Depositing User: | Yunus Aksoy |
| Date Deposited: | 09 Dec 2024 13:49 |
| Last Modified: | 09 Dec 2024 17:34 |
| URI: | https://eprints.bbk.ac.uk/id/eprint/54690 |
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