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Article: How do changes in military spending affect the economy? Evidence from state-level data.
- Article from:
- New England Economic Review
- Article date:
- March 1, 1996
- Author:
CopyrightCOPYRIGHT 1996 Federal Reserve Bank of Boston. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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A principal task for macroeconomics is to explain business cycles - why economies experience somewhat regular patterns of expansion and contraction, with a high degree of correlation across industries and regions. This is also a difficult task; for example, there is still no broad consensus on what caused the U.S. recession of 1990-91, much less on what policymakers could have done to avoid it. Among the hardest things to understand about business cycles are the sharp and unpredictable turning points when the economy reverses course and begins an expansion or contraction.
One reason that business cycle turning points are hard for economists to understand and predict ...