Is Military Spending Quantitatively Important for Business Cycle Fluctuations?

Aleksandar Vasilev

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: We introduce a military sector and external security considerations into a real-business-cycle setup with a public sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). We investigate the quantitative importance of the presence of a military sector and external threat considerations for the cyclical fluctuations in Bulgaria. We find the quantitative effect of such aspects to be very small, and thus not important for business cycle stabilization, or public finance issues, as in Bulgaria the spending on military is relatively small relative to the size of the economy.

Keywords: Business cycles; military spending; security considerations; external threats; Bulgaria (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Date: 2021-01-03
New Economics Papers: this item is included in nep-bec, nep-dge, nep-mac and nep-tra
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Related works:
Journal Article: Is Military Spending Quantitatively Important for Business Cycle Fluctuations? (2022)
Journal Article: Is military spending quantitatively important for business cycle fluctuations? (2021)
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