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A Criritique of the Multi-Sector Model of the Effects of Military Spending on Economic Growth

  • Alexamder, W.R.
  • Hansen, P. Author-Emai
Registered author(s):

    The multi-sector model of economic growth is the most widely used framework for empirically investigating the effects of military spending on growth. It has also been applied to ‘nonmilitary’ sectors of the economy, such as exporters and the government. This paper presents a survey of criticisms in the context of models with a military sector (but also applicable to nonmilitary models). These include: the possibility of spurious correlations, misspecification biases, observational equivalence and invalid statistical inferences concerning a key parameter of the model. It is concluded, therefore, that overcoming these shortcomings or finding a more robust, alternative approach would be worthwhile.

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    File URL: http://www.usc.es/economet/reviews/aeid423.pdf
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    Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

    Volume (Year): 4 (2004)
    Issue (Month): 2 ()
    Pages:

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    Handle: RePEc:eaa:aeinde:v:4:y:2004:i:1_11
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    15. Odedokun, M. O., 1996. "Alternative econometric approaches for analysing the role of the financial sector in economic growth: Time-series evidence from LDCs," Journal of Development Economics, Elsevier, vol. 50(1), pages 119-146, June.
    16. Deger, Saadet & Sen, Somnath, 1995. "Military expenditure and developing countries," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 11, pages 275-307 Elsevier.
    17. Simon, Herbert A, 1979. " On Parsimonious Explanations of Production Relations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(4), pages 459-74.
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