The Regional Economic Effects of Military Base Realignments and Closures in Germany

23 Pages Posted: 21 Apr 2010  

Alfredo R. Paloyo

Rhine-Westphalia Institute for Economic Research (RWI-Essen); Ruhr Universität Bochum; University of Wollongong

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Matthias Vorell

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Date Written: April 21, 2010

Abstract

Within the context of the current political discussion over base realignments and closures (BRACs) in Germany, this study provides policy guidance by examining the economic consequences to the surrounding community. We identify the causal effect of a reduction in military personnel on a number of socioeconomic indicators within the peripheries of military bases. The BRACs within the German armed forces is used an exogenous source of variation that allows for the estimation of the causal effect of a particular demand shock on household income, output, unemployment, and tax revenue within a specified buff er zone around each base. The analysis covers 298 communities for the period 2003-2007. Consistent with evidence found elsewhere, we find that these base adjustments have only a marginal impact on the local community in which the bases are located.

Keywords: Geographic information system, armed forces, regional adjustment

JEL Classification: H56, K42, R19

Suggested Citation

Paloyo, Alfredo R. and Vance, Colin and Vorell, Matthias, The Regional Economic Effects of Military Base Realignments and Closures in Germany (April 21, 2010). Ruhr Economic Paper No. 181. Available at SSRN: https://ssrn.com/abstract=1593475 or http://dx.doi.org/10.2139/ssrn.1593475

Alfredo R. Paloyo (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Ruhr Universität Bochum ( email )

Bochum, 44780
Germany

University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

HOME PAGE: http://www.rwi-essen.de

Matthias Vorell

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

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