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How Strong is the Relationship between Defence Expenditure and Private Consumption? Evidence from the United States

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Author Info
Luca Pieroni () (University of Perugia (Italy) and University of the West of England, Bristol)

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Abstract

A long run conditional demand model is specified to provide empirical evidence on the relationship between government defence expenditure and private consumption in the United States. By assuming that government defence expenditure is exogenously determined with respect to private consumption decisions, the empirical results show a significant impact on the utility function of households and substitutable or complementary effects for specific categories of private expenditure. The findings are in line with the evidence that in aggregate it is possible to obtain a weak impact of defence expenditure on consumption.

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Publisher Info
Paper provided by University of the West of England, Department of Economics in its series Discussion Papers with number 0705.

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Length: 28 pages
Date of creation: Mar 2007
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Handle: RePEc:uwe:wpaper:0705

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Related research
Keywords: Military Expenditure; Consumption; crowding out/in;

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
H4 - Public Economics - - Publicly Provided Goods

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