Reassessing the Cross-Sectional Fiscal Multiplier: Evidence from U.S. Defense Procurement, 1966-2019

This paper revisits the empirical analysis of Nakamura and Steinsson (2014). I reconstructed and extended the original dataset to cover the period 1966–2019, harmonizing two major sources of data: the Defense Contract Action Data System (DCADS) and USAspending.gov. I discuss how to aggregate these contract-level data to better capture spending more directly tied to domestic stimulus. Estimated multipliers are slightly lower in narrow replications but increase when incorporating later fiscal episodes. I also assess the validity and stability of cross-sectional estimates. While some heterogeneity exists, dispersion in state-level responses remains within reasonable boundaries, especially when accounting for dynamic persistence.