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What Price Cold War? Military Spending and Private Investment in the U.S., 1946-1979

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  • Edelstein, Michael

Abstract

Over the long haul U.S. military spending, 1946-79, came at the sacrifice of non-durable consumption expenditures, not investment expenditures. This conclusion is based on an examination of trends in the GNP shares of consumption, investment, government and net exports expenditures, 1889-1979. As U.S. defense expenditures moved to new secular heights in the late 1940s and 1950s, the component of U.S. national expenditure sacrificed was private, non-durable, consumption expenditures. When defense spending fell on trend in the 1960s and 1970s, public consumption expenditures rose. The mild negative correlation between military expenditures in the U.S. found by previous research appears to have been based on very brief crowding-out and crowding-in effects of the federal government's budgets in the first and last years of the Korean and Vietnam Wars. Copyright 1990 by Oxford University Press.

Suggested Citation

  • Edelstein, Michael, 1990. "What Price Cold War? Military Spending and Private Investment in the U.S., 1946-1979," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 421-437, December.
    • Handle: RePEc:oup:cambje:v:14:y:1990:i:4:p:421-37
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    Cited by:

    1. ANORUO, Emmanuel & AKPOM, Uchenna, 2016. "Military Spending-Household Consumption Nexus: A Heterogeneous Panel Data Approach - La relazione tra spesa militare e consumi delle fam iglie: un approccio panel data," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 69(3), pages 175-192.
    2. Pieroni, Luca, 2009. "Does defence expenditure affect private consumption? Evidence from the United States," Economic Modelling, Elsevier, vol. 26(6), pages 1300-1309, November.
    3. Luca, Pieroni & Lorusso, Marco, 2015. "Are all the fiscal policy shocks identical? Analysing the effects on private consumption of civilian and military spending shocks," MPRA Paper 69151, University Library of Munich, Germany.
    4. Pieroni, Luca & Lorusso, Marco, 2013. "The Role of Fiscal Policy Components in Private Consumption: a Re-examination of the Effects of Military and Civilian Spending," MPRA Paper 47878, University Library of Munich, Germany.

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