Aggregate and Distributional Implications of a Military Buildup by Edouard Challe

Join us for this week's Macroeconomics Research Seminar, Autumn Term 2025.

Edouard Challe, from the Paris School of Economics, will present this week's Macroeconomics seminar on Aggregate and Distributional Implications of a Military Buildup.

Abstract

We study the aggregate and distributional implications of a military buildup of the size implied by the June 2025 NATO guidelines change. Our framework of analysis is a calibrated Overlapping-Generations model with Heterogeneous Agents and a rich fiscal side that includes fully specified tax-and-transfer and social-security systems. We calibrate the model to match relevant aggregate and cross-sectional moments and then examine how alternative fiscal-policy mixes to finance the planned increase in government expenditures shape aggregate outcomes as well as the distributions of hours worked, disposable income, and consumption across the population. We highlight the presence of a trade-off across alternative fiscal-policy mixes between mitigating aggregate consumption crowding-out (a traditional measure of the cost of government spending expansions) and limiting income and consumption inequality

This seminar will be held on campus in 5B.307 at 1.30pm on Tuesday, 11 November 2025. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.