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"Guns or Butter?" Revisited: Robustness and Nonlinearity Issues in the Defense-Grotwth Nexus

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Author Info
Jesús Crespo Guaresma ()
Gerhard Reitschuler ()

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Abstract

The relationship between military expenditure and growth is studied taking into account potential nonlinearities and robustness issues in the specification of the econometric models used. Using cross-country growth regressions and the widely used Feder-Ram model, the partial correlation between defense and economic growth appears robust and significantly negative only for countries with a relatively low military expenditure ratio. While the externality effect appears positive in this subgroup of countries, the overall effect turns negative due to the size effect of the military sector.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0310.

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Date of creation: Aug 2003
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Handle: RePEc:vie:viennp:0310

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Find related papers by JEL classification:
E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions

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  2. repec:att:wimass:1919983 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Chad R. Wilkerson & Megan D. Williams, 2008. "How is the rise in national defense spending affecting the Tenth District economy?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 49-79. [Downloadable!]
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