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

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  • Alexamder, W.R.
  • Hansen, P. Author-Emai

Abstract

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.

Suggested Citation

  • Alexamder, W.R. & Hansen, P. Author-Emai, 2004. "A Criritique of the Multi-Sector Model of the Effects of Military Spending on Economic Growth," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(2).
    • Handle: RePEc:eaa:aeinde:v:4:y:2004:i:1_11
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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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