Models of Military Expenditure and Growth: A Critical Review

Defence and Peace Economics, Vol. 16, pp. 449-461, 2005

Posted: 24 Jan 2006

See all articles by John Paul Dunne

John Paul Dunne

University of the West of England

Ron Smith

Birkbeck College

Dirk Willenbockel

University of Sussex - Institute of Development Studies

Abstract

This paper reviews some of the theoretical and econometric issues involved in estimating growth models that include military spending. While the mainstream growth literature has not found military expenditure to be a significant determinant of growth, much of the defence economics literature has found significant effects. The paper argues that this is largely the product of the particular specification, the Feder-Ram model, that has been used in the defence economics literature but not in the mainstream literature. The paper critically evaluates this model, detailing its problems and limitations and suggests that it should be avoided. It also critically evaluates two alternative theoretical approaches, the augmented Solow and the Barro model, suggesting that they provide a more promising avenue for future research. It concludes with some general comments about modelling the links between military expenditure and growth.

Keywords: Military expenditure, Defence spending, Growth

JEL Classification: O4, H5

Suggested Citation

Dunne, John Paul and Smith, Ron P. and Willenbockel, Dirk, Models of Military Expenditure and Growth: A Critical Review. Defence and Peace Economics, Vol. 16, pp. 449-461, 2005, Available at SSRN: https://ssrn.com/abstract=877014

John Paul Dunne (Contact Author)

University of the West of England ( email )

Blackberry Hill Bristol
Bristol, Avon BS16 1QY
United Kingdom

Ron P. Smith

Birkbeck College ( email )

Malet Street
London WC1E 7HX
United Kingdom
+44 207 631 6413 (Phone)
+44 207 631 6416 (Fax)

Dirk Willenbockel

University of Sussex - Institute of Development Studies ( email )

Brighton
Falmer, Brighton, East Sussex BN1 9RE
United Kingdom

HOME PAGE: http://www.ids.ac.uk

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