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Time Varying Determinants of US Demand for Defense Spending in the post-Cold War Era

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  • A. Talha Yalta
  • Furkan Tüzün

Abstract

We adopt the maximum entropy bootstrap methodology in a rolling window framework in order to investigate the time varying determinants of the US demand for defense spending. Our results based on annual data between 1967 and 2018 show that the US defense demand is mainly driven by lagged military burden, economic growth, GDP share of non-military government spending, election cycle, relative costliness of defense as well as the Russian and the Chinese military burdens. Moreover, the signs and the magnitude of the coefficients show significant variations throughout the sample period. The results also provide a strong evidence of the rising rivalry between the US and China, reflecting the developments in the world economy and the global military arena in the last two decades.

Suggested Citation

  • A. Talha Yalta & Furkan Tüzün, 2021. "Time Varying Determinants of US Demand for Defense Spending in the post-Cold War Era," Defence and Peace Economics, Taylor & Francis Journals, vol. 32(7), pages 829-846, October.
    • Handle: RePEc:taf:defpea:v:32:y:2021:i:7:p:829-846
    DOI: 10.1080/10242694.2020.1725856
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    Cited by:

    1. Klomp, Jeroen, 2023. "Political budget cycles in military expenditures: A meta-analysis," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 1083-1102.

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