The boots, the boom, and the bust: The effect of military spending on economic growth revisited
This short paper investigates the effect of military spending on economic growth using unbalanced panel data of 264 countries during 1960-2016 from the World Development Indicators.Using the structural model built upon the celebrated Solow growth model as outlined in Dunne et al.(2005), I estimate various specifications of fixed effects, random effects, and Arellano-Bond dynamic panel models and find a uniformly conclusive result that military spending has a statistically significant negative impact on per capita real income, after the effects of covariates including lagged real per capital GDP, accumulated capital stock, and population growth, have been controlled for.In an attempt to reduce omitted variables and misspecification bias, I further include country specific linear and quadratic time trends à la Friedberg (1998) in all empirical models and find the results to be invariant to the augmented specification forms.The results are consistent with the conjecture in Dunn et al.(2005) that the effect of military spending on growth is probably non-linear and reconcile many of the differences in the findings in the literature.
Military spending Economic growth Panel data econometrics
Tongyai Iyavarakul
School of Development Economics,National Institute of Development Administration 118 Serithai Road Bangkapi Bangkok 10240 Thailand
国际会议
广州
英文
322-332
2017-11-23（万方平台首次上网日期，不代表论文的发表时间）