Title page 1

Contents 1

Abstract 3

1. Introduction 5

2. Macroeconomic effects of defence spending: a brief literature review 6

3. Effects of defence spending on SNGs' finances 10

4. Some policy conclusions 18

References 19

Figure 1. Military spending trends and projections 6

Figure 2. Shares of own in total revenues of OECD SNGs, 2023 11

Figure 3. Composition of subnational own revenues, 2023 12

Figure 4. Composition of General Government Spending, by level of government, 2023 13

Figure 5. Functional composition of subnational spending in OECD countries, 2023 13

Figure 6. Subnational debt ratios to GDP, 2023 14

Figure 7. Subnational debt ratios to tax revenues, 2023 15

Figure 8. Composition of subnational debt in OECD countries, 2023 16