Article

Assessing the Effects of Military Expenditures on Growth

Giorgio d'Agostino, J. Paul Dunne and Luca Pieroni

in The Oxford Handbook of the Economics of Peace and Conflict

Published in print April 2012 | ISBN: 9780195392777
Published online November 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780195392777.013.0017

Series: Oxford Handbooks

 Assessing the Effects of Military Expenditures on Growth

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The earlier literature regarding the effects of military expenditures on economic growth had initially shown a positive relationship between the two variables. This article examines this topic, taking account of more recent models of growth. The second section considers the alternative general economic theories that inform the development of models to undertake empirical analyses. The third section considers estimation issues. The fourth section considers the alternative formal models that are common in the literature: the Feder–Ram model, the modified Solow model, and the endogenous growth models. The fifth section presents some empirical results to illustrate the issues involved in estimating the models and to compare their performance. The estimation of more sophisticated models indicates, contrary to the early studies, that the effect of military expenditures on growth is negative.

Keywords: growth models; economic growth; war expenditures; economic theory; modified Solow mode; Feder–Ram model

Article.  9316 words. 

Subjects: Economics ; Microeconomics ; Econometric and Statistical Methods and Methodology: General

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