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Military Spending and Stochastic Growth: A Small Open Economy

Author

Listed:
  • Cheng-te Lee

    (Department of International Trade, Chinese Culture University, Taiwan)

  • Shang-fen Wu

    (Department of International Business, Chinese Culture University, Taiwan)

Abstract

In a stochastic endogenous growth model, the effects of military spending on economic growth are explored. In addition to the traditional crowding-out effect, we show that the portfolio effect also plays an importance role in determining growth rate in a small open economy. We find that there exists a non-linear relationship between the defense burden and the economic growth.

Suggested Citation

  • Cheng-te Lee & Shang-fen Wu, 2015. "Military Spending and Stochastic Growth: A Small Open Economy," Economics Bulletin, AccessEcon, vol. 35(4), pages 2026-2036.
  • Handle: RePEc:ebl:ecbull:eb-15-00623
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Military spending; Stochastic growth; Small open economy;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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