This thesis estimates the effects of military spending during World War II on national and local price levels using four specifications: a time series, cross section, difference in differences, and panel. I estimate a positive, statistically significant effect across all four specifications. I find that an additional $1 of war contracts/capita increases national price levels by 1.15%. Estimates from my local specification, for which identification is stronger, are smaller. I estimate that an additional $1 of war contracts/capita increases local price levels by 0.05%. A positive effect of spending on inflation is also estimated when variation across time is collapsed. Cities awarded the median level of war contracts/capita experienced 0.98% higher prices in 1946, relative to their pre- dicted levels. Metro regions awarded more contracts/capita than the median level in the 1940-1943 period experienced prices which were approximately 0.63% higher in the post-Pearl Harbor period. Given the inconsistency in the magnitude of my estimates, the main contribution of this thesis is that government spending places a significant level of upward pressure on prices.
"},{"label":"Degree","value":["Bachelor of Arts with Departmental Honors"]},{"label":"Author-supplied Keywords","value":["Inflation","Military spending","World War II"]},{"label":"Administrative Note","value":"Drupal Node ID: 33912