IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v8y2016i7p655-d73822.html

Revisiting the “Guns versus Butter” Argument in China (1950–2014): New Evidence from the Continuous Wavelet Analysis

Author

Listed:
  • Ying Zhang

    (Department of Finance, School of Economics and Management, Southeast University, Nanjing 210096, China)

  • Xiaoxing Liu

    (Department of Finance, School of Economics and Management, Southeast University, Nanjing 210096, China)

  • Rui Wang

    (Department of Finance, School of Economics and Management, Southeast University, Nanjing 210096, China
    School of Economics, Peking University, Beijing 100871, China)

  • Ruobing Tang

    (Department of Finance, School of Economics and Management, Southeast University, Nanjing 210096, China)

Abstract

The long-lasting “guns versus butter” argument reflects the fact that China has been experiencing a difficult choice in terms of improving the defense and social welfare sectors, and thus achieving fiscal sustainability. The result, however, is controversial. The present paper therefore re-examines the relationship between defense and social welfare by employing continuous wavelet analysis during a long period of 1950–2014 in China. We focus in particular on their dynamic correlation and the lead-lag relationship across different frequency bands. Our results clearly show the inexistence of the crowding-out effect between defense expenditure and social welfare; moreover, the increase in defense (social welfare) expenditure could stimulate the expansion of social welfare (defense) spending. In addition, we find a positive relationship between defense and social welfare with defense leading during 1961–1968 in the short term, when China suffered from the economic breakdown and the social turbulence caused by the Great Famine, Sino-Soviet border conflict, etc. Notably, social welfare also led the progress in defense during 1984–1988 and 1995–1998 in the medium and long terms by the further deepening of the opening-up policy and enforcing the economic system reform.

Suggested Citation

  • Ying Zhang & Xiaoxing Liu & Rui Wang & Ruobing Tang, 2016. "Revisiting the “Guns versus Butter” Argument in China (1950–2014): New Evidence from the Continuous Wavelet Analysis," Sustainability, MDPI, vol. 8(7), pages 1-13, July.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:7:p:655-:d:73822
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/8/7/655/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/8/7/655/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peter C. Frederiksen & Robert E. Looney, 1994. "Budgetary Consequences of Defense Expenditures in Pakistan: Short-Run Impacts and Long-Run Adjustments," Journal of Peace Research, Peace Research Institute Oslo, vol. 31(1), pages 11-18, February.
    2. repec:cup:apsrev:v:63:y:1969:i:02:p:412-426_26 is not listed on IDEAS
    3. Geoffrey Harris & Mark Kelly & Pranowo, 1988. "Trade-offs Between Defence and Education/Health Expenditures in Developing Countries," Journal of Peace Research, Peace Research Institute Oslo, vol. 25(2), pages 165-177, June.
    4. Christos Kollias & Susana-Maria Paleologou, 2011. "Budgetary trade-offs between defence, education and social spending in Greece," Applied Economics Letters, Taylor & Francis Journals, vol. 18(11), pages 1071-1075.
    5. Peroff, Kathleen & Podolak-Warren, Margaret, 1979. "Does Spending on Defence Cut Spending on Health?: A Time-Series Analysis of the U.S. Economy 1929–74," British Journal of Political Science, Cambridge University Press, vol. 9(1), pages 21-39, January.
    6. Julide Yildirim & Selami Sezgin, 2003. "Military expenditure and employment in Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(2), pages 129-139.
    7. Russett, Bruce, 1982. "Defense Expenditures and National Well-being," American Political Science Review, Cambridge University Press, vol. 76(4), pages 767-777, December.
    8. Onur Ozsoy, 2002. "Budgetary Trade-Offs Between Defense, Education and Health Expenditures: The Case of Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(2), pages 129-136.
    9. Luís Aguiar-Conraria & Maria Joana Soares, 2014. "The Continuous Wavelet Transform: Moving Beyond Uni- And Bivariate Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 344-375, April.
    10. Eric S. Lin & Hamid E. Ali & Yu-Lung Lu, 2015. "Does Military Spending Crowd Out Social Welfare Expenditures? Evidence from a Panel of OECD Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(1), pages 33-48, February.
    11. Mintz, Alex, 1989. "Guns Versus Butter: A Disaggregated Analysis," American Political Science Review, Cambridge University Press, vol. 83(4), pages 1285-1293, December.
    12. David R. Davis & Steve Chan, 1990. "The Security-Welfare Relationship: Longitudinal Evidence from Taiwan," Journal of Peace Research, Peace Research Institute Oslo, vol. 27(1), pages 87-100, February.
    13. David Dabelko & James M. McCormick, 1977. "Opportunity Costs of Defense: Some Cross-National Evidence," Journal of Peace Research, Peace Research Institute Oslo, vol. 14(2), pages 145-154, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ying Zhang & Xiaoxing Liu & Jiaxin Xu & Rui Wang, 2017. "Does military spending promote social welfare? A comparative analysis of the BRICS and G7 countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(6), pages 686-702, November.
    2. Eric S. Lin & Hamid E. Ali & Yu-Lung Lu, 2015. "Does Military Spending Crowd Out Social Welfare Expenditures? Evidence from a Panel of OECD Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(1), pages 33-48, February.
    3. Chiung-Ju Huang & Yuan-Hong Ho, 2018. "Does Taiwan's Defense Spending Crowd out Education and Social Welfare Expenditures?," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 14(1), pages 67-82, February.
    4. María Concepción Pérez-Cárceles, 2025. "Is defence expenditure a guarantee of human development? A panel data approach in the group of twenty," Applied Economics, Taylor & Francis Journals, vol. 57(20), pages 2569-2580, April.
    5. Wen-Yi Chen & Yai-Wun Liang & Yu-Hui Lin, 2018. "Does Health Spending Crowd out Defense in the United States? Evidence from Wavelet Multiresolution Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(7), pages 780-793, November.
    6. MAÏ ASSAN CHEDI, Maman, 2022. "Does Defence Expenditure Affect Education and Health expenditures in Saharan Africa?," African Journal of Economic Review, African Journal of Economic Review, vol. 10(4), September.
    7. Masako Ikegami & Zijian Wang, 2023. "Does military expenditure crowd out health-care spending? Cross-country empirics," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(2), pages 1657-1672, April.
    8. Luqman, Muhammad & Antonakakis, Nikolaos, 2021. "Guns better than butter in Pakistan? The dilemma of military expenditure, human development, and economic growth," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    9. Adam Coutts & Adel Daoud & Ali Fakih & Walid Marrouch & Bernhard Reinsberg, 2019. "Guns and butter? Military expenditure and health spending on the eve of the Arab Spring," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(2), pages 227-237, February.
    10. James H. Lebovic, 2001. "Spending Priorities and Democratic Rule in Latin America," Journal of Conflict Resolution, Peace Science Society (International), vol. 45(4), pages 427-452, August.
    11. Seemab Gillani & Muhammad Nouman Shafiq & Tusawar Iftikhar Ahmad, 2019. "Military Expenditures and Health Outcomes: A Global Perspective," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 1(1), pages 1-20, June.
    12. HeeMin Kim & Hyeyoung Yoo & Jungho Roh, 2015. "A re-examination of the effects of the economy, government spending, and incumbent ideology on national policy mood," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 18(4), pages 329-344, December.
    13. Usman Khalid & Olivier Habimana, 2021. "Military Spending and Economic Growth in Turkey: A Wavelet Approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 32(3), pages 362-376, April.
    14. Adelaide Baronchelli & Antonella Biscione & Raul Caruso, 2025. "Exploring the relationship between military engagement and income inequality in the LAC region (1990-2022)," Economics Bulletin, AccessEcon, vol. 45(2), pages 979-987.
    15. Khalid Zaman, 2019. "Correction to: Does higher military spending affect business regulatory and growth specific measures? Evidence from the group of seven (G–7) countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 349-349, April.
    16. Posma Sariguna Johnson Kennedy, 2022. "Is There Competition in Budget Policy of Education and Defense in Indonesia?," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 8(2), pages 58-62, 06-2022.
    17. Issofou NJIFEN, 2026. "Contradictory public expenditures in Low-Income Countries: revisiting the military versus health spending dilemma," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 63, pages 217-240.
    18. Adem Y. Elveren, 2012. "Military Spending and Income Inequality:Evidence on Cointegration and Causality for Turkey,1963--2007," Defence and Peace Economics, Taylor & Francis Journals, vol. 23(3), pages 289-301, April.
    19. Seemab Gillani & Muhammad Nouman Shafiq & Tusawar Iftikhar Ahmad, 2019. "Military Expenditures and Health Outcomes: A Global Perspective," iRASD Journal of Energy and Environment, International Research Association for Sustainable Development (iRASD), vol. 1(1), pages 1-20, June.
    20. Michael D. McGinnis, 1991. "Richardson, Rationality, and Restrictive Models of Arms Races," Journal of Conflict Resolution, Peace Science Society (International), vol. 35(3), pages 443-473, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:8:y:2016:i:7:p:655-:d:73822. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager The email address of this maintainer does not seem to be valid anymore. Please ask MDPI Indexing Manager to update the entry or send us the correct address (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.