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How Strong is the Relationship between Defence Expenditure and Private Consumption? Evidence from the United States

  • Luca Pieroni

    ()

    (University of Perugia (Italy) and University of the West of England, Bristol)

A long run conditional demand model is specified to provide empirical evidence on the relationship between government defence expenditure and private consumption in the United States. By assuming that government defence expenditure is exogenously determined with respect to private consumption decisions, the empirical results show a significant impact on the utility function of households and substitutable or complementary effects for specific categories of private expenditure. The findings are in line with the evidence that in aggregate it is possible to obtain a weak impact of defence expenditure on consumption.

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File URL: http://carecon.org.uk/DPs/0705.pdf
File Function: First version, 2007
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Paper provided by Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol in its series Working Papers with number 0705.

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Length: 28 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:uwe:wpaper:0705
Contact details of provider: Postal: 0117 328 3610
Phone: 0117 328 3610
Web page: http://www1.uwe.ac.uk/bl/research/bristoleconomics.aspx

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