THE ECONOMIC IMPACT OF WORLD WAR II IN AMERICA: Multipliers, Productivity, and Sacrifice While Producing Massive Amounts of Munitions

This chapter summarizes the research of the last three decades that has challenged the views that the War strengthened the U.S. economy. Doubts are raised about contemporary Keynesian analysis that emphasized economic stimulus from large federal deficits. Crowding out of private activity better describes the situation. The chapter describes work on changes in manufacturing productivity during the War by Alexander Field and Robert Gordon. Studies of county economies show that most measures of per capita economic outcomes were not higher after the war in the areas where war spending were higher. The major change wrought was a rise in population in those areas. Calculations of the direct costs of fighting the war among major combatants range from a cost of about two years of GDP in Italy to three years in the United States to over 13 years of GDP in the USSR.