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US Military Expenditures and Economic Growth: Some Evidence from Spectral Methods

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  • Michael Gerace

Abstract

There is not much consensus on what the relationship is between military expenditures and economic growth. One argument is that military expenditures have a positive impact on growth because they are used as a fiscal policy too. The other hypothesis is that military expenditures have a negative impact on growth. Neither argument is consistent with the results reported here. This paper conducts a spectral analysis on the growth rates of real military and non-military US government expenditures and GDP from 1951-1997. The results suggest that, while non-military spending does move counter-cyclically with real GDP growth rates, military spending does not.

Suggested Citation

  • Michael Gerace, 2002. "US Military Expenditures and Economic Growth: Some Evidence from Spectral Methods," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(1), pages 1-11.
  • Handle: RePEc:taf:defpea:v:13:y:2002:i:1:p:1-11 DOI: 10.1080/10242690210966
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    References listed on IDEAS

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    1. Stock, James H. & Watson, Mark W., 1999. "Business cycle fluctuations in us macroeconomic time series," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 1, pages 3-64 Elsevier.
    2. Ã…dne Cappelen & Nils Petter Gleditsch & Olav Bjerkholt, 1984. "Military Spending and Economic Growth in the OECD Countries," Journal of Peace Research, Peace Research Institute Oslo, vol. 21(4), pages 361-373, December.
    3. repec:cup:apsrev:v:78:y:1984:i:02:p:356-371_25 is not listed on IDEAS
    4. Smith, R P, 1977. "Military Expenditure and Capitalism," Cambridge Journal of Economics, Oxford University Press, vol. 1(1), pages 61-76, March.
    5. Lim, David, 1983. "Another Look at Growth and Defense in Less Developed Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 31(2), pages 377-384, January.
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    Citations

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    Cited by:

    1. Delucchi, Mark A. & Murphy, James J., 2008. "US military expenditures to protect the use of Persian Gulf oil for motor vehicles," Energy Policy, Elsevier, pages 2253-2264.
    2. Syed Ali Raza & Muhammad Shahbaz & Sudharshan Reddy Paramati, 2017. "Dynamics of Military Expenditure and Income Inequality in Pakistan," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, pages 1035-1055.
    3. Luís Francisco Aguiar & Pedro C. Magalhães & Maria Joana Soares, 2010. "On Waves in War and Elections Wavelet Analysis of Political Time-Series," NIPE Working Papers 1/2010, NIPE - Universidade do Minho.
    4. d'Agostino, G. & Dunne, J.P. & Pieroni, L., 2011. "Optimal military spending in the US: A time series analysis," Economic Modelling, Elsevier, vol. 28(3), pages 1068-1077, May.
    5. Uk Heo & John Bohte, 2012. "Who Pays for National Defense? Financing Defense Programs in the United States, 1947–2007," Journal of Conflict Resolution, Peace Science Society (International), pages 413-438.
    6. Pieroni, Luca & d'Agostino, Giorgio & Lorusso, Marco, 2008. "Can we declare military Keynesianism dead?," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 675-691.
    7. Kimbambu Tsasa Vangu, Jean - Paul, 2012. "Analyse de la Relation Guerres Civiles et Croissance Économique
      [Civil Wars and Economic Growth in DRC]
      ," MPRA Paper 42424, University Library of Munich, Germany, revised 05 Feb 2012.
    8. Pieroni, Luca, 2009. "Does defence expenditure affect private consumption? Evidence from the United States," Economic Modelling, Elsevier, vol. 26(6), pages 1300-1309, November.
    9. repec:eco:journ1:2017-03-42 is not listed on IDEAS
    10. Wijeweera Albert & Webb Matthew J., 2010. "A Peace Dividend for Sri Lanka: The Case for a Return to Prosperity Following the End of Hostilities," Global Economy Journal, De Gruyter, vol. 10(2), pages 1-11, May.
    11. Giorgio d'Agostino & Luca Pieroni & J Paul Dunne, 2009. "Optimal Military Spending in the US: A Time Series Analysis," Working Papers 0903, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    12. Obreja Brasoveanu, Laura, 2010. "The Impact of Defense Expenditure on Economic Growth," Journal for Economic Forecasting, Institute for Economic Forecasting, pages 148-167.
    13. Albert Wijeweera & Matthew J. Webb, 2012. "Using the Feder-Ram and Military Keynesian Models to Examine the Link Between Defence Spending and Economic Growth in Sri Lanka," Defence and Peace Economics, Taylor & Francis Journals, pages 303-311.
    14. repec:ipg:wpaper:2014-513 is not listed on IDEAS
    15. Raza, Syed Ali & Shahbaz, Muhammad, 2014. "To Battle Income Inequality, Focus on Military Expenditures: Lesson from Pakistan," MPRA Paper 57773, University Library of Munich, Germany.
    16. Antonio N. Bojanic, 2013. "The composition of government expenditures and economic growth in Bolivia," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 50(1), pages 83-105, May.
    17. Luca Pieroni, 2007. "How Strong is the Relationship between Defence Expenditure and Private Consumption? Evidence from the United States," Working Papers 0705, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    18. Chen, Pei-Fen & Lee, Chien-Chiang & Chiu, Yi-Bin, 2014. "The nexus between defense expenditure and economic growth: New global evidence," Economic Modelling, Elsevier, vol. 36(C), pages 474-483.

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