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Military spending and stochastic growth

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  • Gong, Liutang
  • Zou, Heng-fu

Abstract

This study examines capital accumulation, military spending, arms accumulation, and output growth in a stochastic endogenous growth model. The analysis shows that higher (lower) growth in foreign military spending leads to faster (slower) economic growth in the home country if the home country¡¯s intertemporal substitution elasticity in consumption is smaller (larger); but more volatility in foreign military spending can lead to higher economic growth in the home country when its intertemporal substitution elasticity is large. In addition, shocks to output production may stimulate economic growth.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 28 (2003)
Issue (Month): 1 (October)
Pages: 153-170

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Handle: RePEc:eee:dyncon:v:28:y:2003:i:1:p:153-170

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References

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  5. Zou, Heng-fu, 1995. "A dynamic model of capital and arms accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 371-393.
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Citations

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Cited by:
  1. Klaus Wälde, 2009. "Production Technologies in Stochastic Continuous Time Models," CESifo Working Paper Series 2831, CESifo Group Munich.
  2. Kwamie Dunbar, 2009. "Stochastic Business Cycle Volatilities, Capital Accumulation and Economic Growth: Lessons from the Global Credit Market Crisis," Working papers 2009-36, University of Connecticut, Department of Economics.
  3. J Paul Dunne & Ron Smith & Dirk Willenbockel, 2004. "Models of Military Expenditure and Growth: A Critical Review," Working Papers 0408, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  4. Janmaat, John A & Ruijs, Arjan, 2006. "Investing in Arms to Secure Water," MPRA Paper 10667, University Library of Munich, Germany.
  5. Li, Anpeng, 2012. "Nuclear Arms Race and Environment," MPRA Paper 43883, University Library of Munich, Germany.
  6. Deng-Shan Wang & Yan Wang & Yifang Liu & Heng-fu Zou, 2009. "Optimal Military Spending, Trade and Stochastic Economic Growth," CEMA Working Papers 373, China Economics and Management Academy, Central University of Finance and Economics.

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