This paper estimates the macroeconomic effects of defence spending for a panel of up to 27 EU member states over 1999–2025 using Panel Local Projections. We look beyond the output multiplier that dominates the literature to trace the price implications of defence spending and the demand-side channels through which effects operate. A key methodological contribution is a country-specific order-date adjustment for capital expenditure, constructed from the SIPRI Arms Transfers Database, which shifts the estimated (unitary) peak GDP multiplier from around year one to approximately year three to…