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Defence spending: Burden or growth‐promoting?
Journal article   Peer reviewed

Defence spending: Burden or growth‐promoting?

William R J Alexander
Defence and Peace Economics, Vol.6(1), pp.13-25
1995
url
https://doi.org/10.1080/10430719508404809View
Published Version

Abstract

Applied Economics military spending burden on growth underconsumptionist hypothesis sectoral production functions
The sectoral production function model of Feder (1983) has been widely used to examine the link between defence spending and economic growth. In this paper, the model, for which too much has been claimed in some past work, is examined, and the case is made for using growth in real non-defence output rather than growth in real aggregate output (inclusive of military spending) as the dependent variable. Attention is restricted to a small group of OECD countries for which reliable labour force and capital stock (as well as defence) data are obtainable. With non-defence output as the dependent variable and using only high quality data, no evidence in favour of the underconsumptionist (as opposed to the defence as a burden) position is found.

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