Jim D. is correct that there was a (relatively thin) literature on the mulipliers from military spending. Doug Henwood sent me some estimates of mulipliers by various industries. I especially appreciate Paul's detailed response. The article from the URL that he provided was very similar to what I was thinking.
Jim suggested that multipliers are constant, but there are two considerations in terms of employment. First, the MPC will be lower for richer people than for someone who is destitute. In addition, although the Keynesian cross suggests a one-to-one linkage between GDP and employment, that is not necessarily true. Although the minicar example might not be the best, I recall Business Week saying that a Cadillac cost little more than a Chevy to produce -- suggesting that the employment effect would be about the same, although the retail price is quite a bit higher. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
