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The Impact of Reducing Military Expenditures in South Korea Using a CGE Model

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  • Woosung Kim

Abstract

Military expenditure is an essential budget item because it is directly related to national security and national competitiveness in the world. Therefore, it is hard to reduce military expenditure. Many scholars have explored the relationship between military expenditure and economic development. Unlike the previous research, this paper does not analyze the relationship between defense expenditures and economic development. Instead, this research explores how various industries are affected by defense expenditures by using a computable general equilibrium (CGE) model. CGE model can help to analyze the impact of reducing military expenditure and can forecast the impact of the investment of reduced military expenditure in other industries by simulations. Simulations seem that reducing military expenditure negatively affects economic development, but this research identifies industries for which increased government expenditures would improve household well-being when defense expenditures are reduced.

Suggested Citation

  • Woosung Kim, 2022. "The Impact of Reducing Military Expenditures in South Korea Using a CGE Model," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(3), pages 577-600, September.
    • Handle: RePEc:spr:jqecon:v:20:y:2022:i:3:d:10.1007_s40953-022-00314-x
    DOI: 10.1007/s40953-022-00314-x
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    1. Charles Shaaba Saba & Nicholas Ngepah, 2019. "A cross-regional analysis of military expenditure, state fragility and economic growth in Africa," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(6), pages 2885-2915, November.
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    3. Eduardo Haddad, 2009. "Interregional Computable General Equilibrium Models," Advances in Spatial Science, in: Michael Sonis & Geoffrey J. D. Hewings (ed.), Tool Kits in Regional Science, chapter 4, pages 119-154, Springer.
    4. Russett, Bruce, 1982. "Defense Expenditures and National Well-being," American Political Science Review, Cambridge University Press, vol. 76(4), pages 767-777, December.
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