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The Effect of Military Expenditure on Profit Rates: Evidence from Major Countries

Adem Elveren () and Sara Hsu ()
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Sara Hsu: Department of Economics, State University of New York-New Paltz

World Journal of Applied Economics, 2018, vol. 4, issue 2, 75-94

Abstract: This article provides evidence of the effect of military expenditures on the rate of profits by focusing on 32 major countries for the period of 1963-2008 by using data from the Extended Penn World Tables, the University of Texas Inequality Project Estimated Household Income Inequality, the World Development Indicator, and the Stockholm International Peace Research Institute. The article employs a Generalized Method of Moment model within a Marxist framework. Findings show that military expenditures have positive effect on the rate of profits. It is also showed that increasing income inequality increases the rate of profits. Finally, the findings suggest that while military expenditures have a positive effect on the profit rates in the case of both armsexporting countries and net-arms exporters, the relationship is not that significant in the case of arms-importing countries.

Keywords: Military expenditure; Profit rate; Income inequality; Panel data; Marxist economics (search for similar items in EconPapers)
JEL-codes: C33 E11 H50 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ana:journl:v:4:y:2018:i:2:p:75-94

DOI: 10.22440/wjae.4.2.2

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