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Does defence expenditure affect private consumption? Evidence from the United States

  • Pieroni, Luca

This paper empirically discusses the relationship between government defence expenditure and private consumption for the United States. The estimations show a substitution or complementary effect of the military sector on private categories of consumer choices, although sensitivity analysis for different utility functions and sub-samples indicates a time-decrease on substitutability. Our findings are in line with previous results highlighting a weak substitution of defence expenditure on aggregate consumption.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 26 (2009)
Issue (Month): 6 (November)
Pages: 1300-1309

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Handle: RePEc:eee:ecmode:v:26:y:2009:i:6:p:1300-1309
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  19. Pitarakis, Jean-Yves & Tridimas, George, 1999. "Total expenditure endogeneity in a system of demand for public consumption expenditures in the UK," Economic Modelling, Elsevier, vol. 16(2), pages 279-291, April.
  20. Barnett, William A. & Serletis, Apostolos, 2008. "Measuring Consumer Preferences and Estimating Demand Systems," MPRA Paper 12318, University Library of Munich, Germany.
  21. Adrian R. Fleissig & Robert J. Rossana, 2003. "Are Consumption and Government Expenditures Substitutes or Complements? Morishima Elasticity Estimates from the Fourier Flexible Form," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 132-146, January.
  22. Dunne, Paul, 1990. "The Political Economy of Military Expenditure: An Introduction," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 395-404, December.
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  27. Urbain, Jean-Pierre, 1995. "Partial versus full system modelling of cointegrated systems an empirical illustration," Journal of Econometrics, Elsevier, vol. 69(1), pages 177-210, September.
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