Interesting numbers on multipliers. The problem I am havi...

Interesting numbers on multipliers. The problem I am having is that I am not sure whether these are Keynesian demand multipliers, or something more like Enrico Moretti regional-export multipoliers. The decision by DoD to support a factory in congressional district X looks, to me, a lot like a regional positive productivity shock:

Alan Auerbach, Yuriy Gorodnichenko, and Daniel Murphy: Local Fiscal Multipliers and Spillovers in the US: "Our baseline estimates imply that a dollar of DOD spending in a city increases GDP in that city by a dollar and increases labour earnings by 0.35, and that an increase of DOD spending equal to a percent of local earnings increases employment by 0.2%...

...These estimates are close to the city-level multiplier estimates from Demyanyk et al. (2018).... The spending shocks also have positive effects on nearby localities, increasing earnings in proximate cities by about half of the own-city effect and increasing GDP in other cities across the same state by between half and a whole of the own-city effect.��Our estimated state-level GDP multiplier effect of around 1.5 is consistent with the state-level estimates in Nakamura and Steinsson (2014).��The positive geographic spillovers imply that any negative spillover effects that operate through factor markets (e.g. pulling in labour from nearby locations) are outweighed by positive demand spillovers (e.g. input-output linkages or induced consumer spending).��These findings imply that the increase in local demand is not accommodated by a net reallocation of labour from nearby locations...

#noted