In this paper, I study the long-term economic effects of temporary government spending shocks by using the surge in U.S. government procurement during World War I as a natural experiment. The project asks whether short-lived fiscal spending can create persistent improvements in regional economic activity, or whether its effects disappear once the spending shock ends.

• Digitized over 10,000 historical procurement contracts to construct original state-level measures of government spending exposure during World War I.
• Used cross-state variation in wartime procurement spending as a natural experiment to estimate the causal effect of temporary fiscal shocks on regional growth.
• Built a state-level historical panel linking government spending shocks to subsequent changes in personal income, employment, and regional economic outcomes.
• Estimated the dynamic effects of government spending over time, showing that temporary spending shocks led to sustained increases in personal income and employment.
• Found that the effects persisted even seven years after the initial spending shock, suggesting that temporary fiscal interventions can generate longer-lasting regional growth.
• Contributed new evidence to the debate on fiscal multipliers, regional development, and whether government spending can have persistent effects beyond the short-run demand response.