Who benefits from increases in military spending? An empirical analysis
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arXiv
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| Main Authors: | , , , , |
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| Format: | Preprint |
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2025
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| _version_ | 1866912701933944832 |
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| author | Beirne, John Mumtaz, Haroon Park, Donghyun Uddin, Gazi Salah Theophilopoulou, Angeliki |
| author_facet | Beirne, John Mumtaz, Haroon Park, Donghyun Uddin, Gazi Salah Theophilopoulou, Angeliki |
| contents | This paper investigates the heterogeneous effects of military spending news shocks on household income and wealth inequality for a large, panel of advanced and emerging economies. Confirming prior literature, we find that military spending news shocks lead to persistent increases in aggregate output and Total Factor Productivity. Our primary contribution is documenting contrasting distributional impacts. We find that expansionary military spending is associated with a mitigation of income inequality, as income gains are disproportionately larger at the left tail of the distribution, primarily driven by a rise in labour income and employment in industry. Conversely, the shock is found to increase wealth inequality, particularly in high-income countries, by raising the wealth share of the top decile via effects on business asset holdings. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2511_08218 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Who benefits from increases in military spending? An empirical analysis Beirne, John Mumtaz, Haroon Park, Donghyun Uddin, Gazi Salah Theophilopoulou, Angeliki General Economics Economics This paper investigates the heterogeneous effects of military spending news shocks on household income and wealth inequality for a large, panel of advanced and emerging economies. Confirming prior literature, we find that military spending news shocks lead to persistent increases in aggregate output and Total Factor Productivity. Our primary contribution is documenting contrasting distributional impacts. We find that expansionary military spending is associated with a mitigation of income inequality, as income gains are disproportionately larger at the left tail of the distribution, primarily driven by a rise in labour income and employment in industry. Conversely, the shock is found to increase wealth inequality, particularly in high-income countries, by raising the wealth share of the top decile via effects on business asset holdings. |
| title | Who benefits from increases in military spending? An empirical analysis |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2511.08218 |