The Macroeconomic Effects of the Buy American Act

09.03.2026 14:15 – 15:30

GTDW@IEE

Jointly with: Miguel Acosta

Abstract:

We ask whether Buy American restrictions on government procurement lead to stronger macroeconomic effects of government spending. We propose a methodology based on a comprehensive understanding of Buy American regulations to identify government spending that is more and less constrained by domestic content restrictions. We validate our methodology in a novel firm-level dataset, and then apply it to federal spending at the state level. We show that government dollars that are not constrained by domestic content restrictions have a higher cross-sectional fiscal multiplier than constrained contract dollars. We rationalize our findings in the context of a New Keynesian model of U.S.regions. Though Buy-American restrictions reduce direct leakage of government dollars abroad, they cause government spending shocks to behave like negative labor supply shocks to the private sector, dampening the GDP response.


Biography:

I am an Assistant Professor in the Department of Economics at the University of Wisconsin—Madison, and a Faculty Research Fellow at the NBER. I received my PhD from Harvard University in 2022. My research focuses on empirical questions in international trade and macroeconomics, with a particular focus on the macroeconomic effects of trade policy and fiscal policy.

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