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

Luca Pieroni

No 705, Working Papers from Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol

Abstract: 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.

Keywords: Military Expenditure; Consumption; crowding out/in (search for similar items in EconPapers)
JEL-codes: D12 H31 H4 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-03
New Economics Papers: this item is included in nep-pbe and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:uwe:wpaper:0705

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