Data and Code for: The Young, the Old, and the Government: Demographics and Fiscal Multipliers

We document that government spending multipliers depend on the population age structure. Using the variation in military spending and birth rates across U.S. states, we show that the local fiscal multiplier is 1.5 and increases with the population share of young people, implying multipliers of 1.1-1.9 in the inter-quartile range. A parsimonious life-cycle open-economy New Keynesian model with credit market imperfections and age-specific differences in labor supply and demand explains 87% of the relationship between local multipliers and demographics. The model implies that the U.S. population aging between 1980 and 2015 caused a 38% drop in national government spending multipliers.