Optimal Military Spending, Trade and Stochastic Economic Growth
In this paper, based on dynamic programming we investigate the military spending, trade and wealth accumulation in a stochastic endogenous growth model. For the Cobb-Dauglas utility function, explicit solutions of the optimal problem in the home country are obtained, and the optimal consumptions of domestic goods and foreign goods, the share of domestic capital stock and foreign bond holdings are derived. The comparative dynamic analysis shows that when intertemporal substitution in consumption is relative elastic, the lower the foreign military spending, the higher variance of foreign military spending and lower volatility in the return of capital or bonds will result in lower consumption ratio and higher economic growth rate.
|Date of creation:||Sep 2009|
|Date of revision:|
|Contact details of provider:|| Web page: http://cema.cufe.edu.cn/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Suleiman Abu-Bader & Aamer Abu-Qarn, 2003.
"Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria,"
163, Ben-Gurion University of the Negev, Department of Economics.
- Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2003. "Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 567-583, September.
- Abu-Bader, Suleiman & Abu-Qarn, Aamer, 2003. "Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria," MPRA Paper 1115, University Library of Munich, Germany.
- van der Ploeg, F. & de Zeeuw, A.J., 1987.
"Perfect equilibrium in a model of competitive arms accumulation,"
FEW 266, Tilburg University, School of Economics and Management.
- van der Ploeg, F & de Zeeuw, A J, 1990. "Perfect Equilibrium in a Model of Competitive Arms Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 131-46, February.
- van der Ploeg, F. & de Zeeuw, A.J., 1988. "Perfect equilibrium in a model of competitive arms accumulation," Discussion Paper 1988-4, Tilburg University, Center for Economic Research.
- Robert S. Pindyck & Andres Solimano, 1993.
"Economic Instability and Aggregate Investment,"
NBER Working Papers
4380, National Bureau of Economic Research, Inc.
- Pindyck, Robert S. & Solimano, Andres, 1993. "Economic instability and aggregate investment," Policy Research Working Paper Series 1148, The World Bank.
- Pindyck, Robert S. & Solimano, Andrés., 1993. "Economic instability and aggregate investment," Working papers 3552-93., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Landau, Daniel, 1993. "The economic impact of military expenditures," Policy Research Working Paper Series 1138, The World Bank.
- Gong, Liutang & Zou, Heng-fu, 2003.
"Military spending and stochastic growth,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 28(1), pages 153-170, October.
- Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 67-83.
- Michael D. Intriligator & D. L. Brito, 1976. "Formal Models of Arms Races," Conflict Management and Peace Science, Peace Science Society (International), vol. 2(1), pages 77-88, February.
When requesting a correction, please mention this item's handle: RePEc:cuf:wpaper:373. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.