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Defense Government Spending Is Contractionary, Civilian Government Spending Is Expansionary

Roberto Perotti

NBER Working Paper No. 20179
Issued in May 2014

---- Acknowledgments ----

This is a vastly revised version of a paper previously circulated under the title: "Expectations and Fiscal Policy: an Empirical Investigation". I thank Jacopo Perego for excellent research assistance, and Alberto Alesina, Fabio Canova, Carlo Favero, Luca Gambetti, Marco Lippi, Giorgio Primiceri, Morten Ravn, Barbara Rossi, Luca Sala, and seminar participants at Universitat Pompeu Fabra for very useful comments and discussions. This paper was produced as part of the project Growth and Sustainability Policies for Europe (GRASP), a collaborative project funded by the European Commission's Seventh Research Framework Programme, contract number 244725. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.

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