The Military Expenditure – Economic Growth Nexus Revisited: Evidence from the United Kingdom

Hanson Robert () and Jeon Joo Young ()
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Hanson Robert: United Kingdom Royal Air Force, London, UK
Jeon Joo Young: Department of Economics, 6816 University of Reading , Reading RG6 6AA, UK

Peace Economics, Peace Science, and Public Policy, 2024, vol. 30, issue 2, 207-248

Abstract: The relationship between government defence expenditure and economic growth is a debated topic. This study uses UK data for the period of 1960–2012 and applies two of the most prevailing theories used within the literature, the ‘Feder-Ram’ and the ‘augmented Solow’ models, to assess this question. We utilise traditional model specifications, alongside extensively altered versions of both models, enabling a comprehensive comparison between them. The alterations to the models include re-evaluating how core variables are expressed, inclusion of measures of conflict, the impact of recession, etc. The results show that the augmented Solow model outperforms the Feder-Ram model, and we provide some explanations for this result. In addition, our results suggest that military expenditure has a positive effect on economic growth within the UK, implying that the decision to reduce defence spending may have been detrimental to the UK economy.

Keywords: military expenditure; economic growth; UK; Feder-Ram; augmented Solow (search for similar items in EconPapers)
JEL-codes: D74 H56 O41 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/peps-2023-0059

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