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Time-series Estimates of the Macroeconomic Impact of Defence Spending in France and the UK

In: Peace, Defence and Economic Analysis

Author

Listed:
  • Stephen Martin

    (Birkbeck College)

  • Ron Smith

    (Birkbeck College)

  • Jacques Fontanel

    (CEDSI)

  • H. Haan

    (Rijksuniversiteit)

Abstract

Measures of the effect of military expenditure on the economy had tended to rely on input-output or international cross-section models rather than time-series estimates. This chapter presents small simultaneous time-series models to estimate the effect of military expenditure on investment unemployment and growth in France and the UK. The impact and long-run multiples are calculated from the restricted and unrestricted reduced forms and the results compared. The relative advantages of time-series-based estimates as compared with other methods are then assessed. The main results suggest that military expenditure tends to reduce investment and increase unemployment. It has a positive immediate effect on growth, but when the system feedbacks are taken into account the net effect is negative.

Suggested Citation

  • Stephen Martin & Ron Smith & Jacques Fontanel & H. Haan, 1987. "Time-series Estimates of the Macroeconomic Impact of Defence Spending in France and the UK," International Economic Association Series, in: Christian Schmidt & Frank Blackaby (ed.), Peace, Defence and Economic Analysis, chapter 16, pages 342-362, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-18898-7_16
    DOI: 10.1007/978-1-349-18898-7_16
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    References listed on IDEAS

    as
    1. Smith, Ron P, 1978. "Military Expenditure and Capitalism: A Reply," Cambridge Journal of Economics, Oxford University Press, vol. 2(3), pages 299-304, September.
    2. Dunne, J P & Smith, R P, 1984. "The Economic Consequences of Reduced UK Military Expenditure," Cambridge Journal of Economics, Oxford University Press, vol. 8(3), pages 297-310, September.
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    Citations

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    Cited by:

    1. Jacques Fontanel, 1991. "The economic significance of military expenditure and the economic impact of disarmament," Working Papers hal-02960094, HAL.
    2. Jacques Fontanel, 1995. "Méthodes et hypothèses d'analyse économique du désarmement et de ses effets sur les économies nationales," Post-Print hal-03335870, HAL.
    3. Julien Malizard, 2014. "Dépenses militaires et croissance économique dans un contexte non linéaire. Le cas français," Revue économique, Presses de Sciences-Po, vol. 65(3), pages 601-618.
    4. Jacques Fontanel, 1997. "Désarmement pour le développement Un pari risqué sur la sagesse des hommes et de leurs institutions," Post-Print hal-03659101, HAL.
    5. Julien Malizard, 2010. "Causality Between Economic Growth and Military Expenditure: The Case of France," Defense & Security Analysis, Taylor & Francis Journals, vol. 26(4), pages 401-413, December.
    6. Julien Malizard, 2013. "Opportunity Cost Of Defense: An Evaluation In The Case Of France," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(3), pages 247-259, June.
    7. Jacques Fontanel & Jean-Paul Hébert, 1991. "French public defence expenditure and procurement policy," Working Papers hal-03207447, HAL.
    8. Jacques Fontanel, 1995. "Les dépenses militaires, variables expliquées ou explicatives des facteurs économiques," Post-Print hal-03334658, HAL.
    9. Jacques Fontanel, 1995. "La recherche des économistes en faveur de la paix," Post-Print hal-03547704, HAL.
    10. Jacques Fontanel, 1994. "Les économistes face aux questions de sécurité et de défense," Post-Print hal-03219575, HAL.
    11. Jacques Fontanel, 2019. "The military budget, a less and less significant indicator of the useful national defense effort," Working Papers hal-02422300, HAL.
    12. Jacques Fontanel & Hans-Christian Cars & Jacques Aben & Ron Smith & Pete Mir, 1987. "Emploi et défense," Post-Print hal-02961942, HAL.
    13. Jacques Fontanel, 1995. "Introduction à l’analyse économique des dépenses militaires," Post-Print hal-03331767, HAL.
    14. Jacques Fontanel, 2007. "Sécurité nationale, dépenses militaires et développement économique," Post-Print hal-03658437, HAL.
    15. Jacques Fontanel, 1987. "La programmation militaire de la France," Post-Print hal-03225756, HAL.
    16. Jacques Fontanel, 1999. "La réduction des dépenses militaires et le désarmement," Post-Print hal-03547256, HAL.
    17. Jacques Fontanel, 1992. "Les dépenses d'armement : fardeau ou bénéfice ?," Post-Print hal-03286814, HAL.
    18. Jacques Fontanel, 1995. "Le désarmement pour le développement," Post-Print hal-03328523, HAL.
    19. Jacques Fontanel, 1990. "L'économie du désarmement," Post-Print hal-02951143, HAL.

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