Guns Or Butter? Revisited: Robustness and Nonlinearity Issues in the Defense-Growth Nexus

19 Pages Posted: 8 Aug 2006

See all articles by Jesús Crespo Cuaresma

Jesús Crespo Cuaresma

University of Innsbruck - Department of Economic Theory, Economic Policy and Economic History

Gerhard Reitschuler

University of Innsbruck

Abstract

The relationship between military expenditure and growth is studied taking into account potential nonlinearities and robustness issues in the specification of the econometric models used. Using cross-country growth regressions and the widely used Feder-Ram model, the partial correlation between defense spending and economic growth appears robust and significantly negative only for countries with a relatively low military expenditure ratio. While the externality effect appears positive in this subgroup of countries, the overall effect turns negative due to the size effect of the military sector.

Suggested Citation

Crespo Cuaresma, Jesús and Reitschuler, Gerhard, Guns Or Butter? Revisited: Robustness and Nonlinearity Issues in the Defense-Growth Nexus. Scottish Journal of Political Economy, Vol. 53, No. 4, pp. 523-541, September 2006. Available at SSRN: https://ssrn.com/abstract=923198 or http://dx.doi.org/10.1111/j.1467-9485.2006.00393.x

Jesús Crespo Cuaresma (Contact Author)

University of Innsbruck - Department of Economic Theory, Economic Policy and Economic History ( email )

Universitaetsstrasse 15
Innsbruck, A - 6020
Austria

Gerhard Reitschuler

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Register to save articles to
your library

Register

Paper statistics

Downloads
15
Abstract Views
494
PlumX Metrics