Military R&D, Growth and the Optimal Allocation of Governement Spending
The purpose of the model developed in the paper is to provide a simple economic framework to address an economic policy question, namely the optimal size of military R&D investment within total public expenditures. To capture the long-run impact of military R&D on the growth rate of the economy, one develops an endogenous growth model in line with Barro  and Shieh & alii ; the model focuses on the optimal sharing of public resources between civil investments, public consumption, military R&D investment and “standard” military spending. It emphasizes the key role played by public military R&D investments in determining the longrun levels of economic growth and welfare. According to our numerical simulations — based on a very prudential set of assumptions concerning the economic impact of military R&D — a 3.65 billions euros permanent reallocation of public spending from civilian unproductive public consumption towards military R&D investment, would induce a 380 billions euros GDP discounted benefit over a decade. In such a framework, characterized by productive externalities originating in military R&D, the government optimal policy should be to massively invest in military R&D: a global tax rate below 12% would drive to a 5.6% GDP long-run yearly growth rate.
|Date of creation:||2006|
|Contact details of provider:|| Postal: 4, bld Francois Mitterand, 91025 Evry Cedex|
Phone: +33 1 69 47 71 77
Fax: +33 1 69 47 70 50
Web page: http://epee.univ-evry.fr
More information through EDIRC
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.:
- 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 131-146, 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.
- van der Ploeg, F. & de Zeeuw, A.J., 1987. "Perfect equilibrium in a model of competitive arms accumulation," Research Memorandum FEW 266, Tilburg University, School of Economics and Management.
- Robert J. Barro, 2012.
"Inflation and Economic Growth,"
CEMA Working Papers
568, China Economics and Management Academy, Central University of Finance and Economics.
- Biswas, Basudeb & Ram, Rati, 1986. "Military Expenditures and Economic Growth in Less Developed Countries: An Augmented Model and Further Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 34(2), pages 361-372, January.
- Maria Arrazola & Jose de Hevia, 2004. "More on the estimation of the human capital depreciation rate," Applied Economics Letters, Taylor & Francis Journals, vol. 11(3), pages 145-148.
- Dakurah, A. Henry & Davies, Stephen P. & Sampath, Rajan K., 2001. "Defense spending and economic growth in developing countries: A causality analysis," Journal of Policy Modeling, Elsevier, vol. 23(6), pages 651-658, August.
- N. Gregory Mankiw & David Romer & David N. Weil, 1992.
"A Contribution to the Empirics of Economic Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 107(2), pages 407-437.
- Barro, R.J., 1988.
"Government Spending In A Simple Model Of Endogenous Growth,"
RCER Working Papers
130, University of Rochester - Center for Economic Research (RCER).
- Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
- Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
- Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, December.
- Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 67-83.
- Deger, Saadet, 1986. "Economic Development and Defense Expenditure," Economic Development and Cultural Change, University of Chicago Press, vol. 35(1), pages 179-196, October.
- Brito, D L, 1972. "A Dynamic Model of an Armaments Race," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(2), pages 359-375, June.
- Heng-fu Zou, 1995.
"A dynamic model of capital and arms accumulation,"
CEMA Working Papers
80, China Economics and Management Academy, Central University of Finance and Economics.
- Brumm, Harold J., 1997. "Military Spending, Government Disarray, and Economic Growth: A Cross-Country Empirical Analysis," Journal of Macroeconomics, Elsevier, vol. 19(4), pages 827-838, October.
- Philippe Aghion & Peter Howitt, 1997. "Endogenous Growth Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011662.
When requesting a correction, please mention this item's handle: RePEc:eve:wpaper:06-12. 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: (Samuel Nosel)
If references are entirely missing, you can add them using this form.