Military Spending and Stochastic Growth: A Small Open Economy

Cheng-te Lee () and Shang-fen Wu ()
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Cheng-te Lee: Department of International Trade, Chinese Culture University, Taiwan
Shang-fen Wu: Department of International Business, Chinese Culture University, Taiwan

Economics Bulletin, 2015, vol. 35, issue 4, 2026-2036

Abstract: In a stochastic endogenous growth model, the effects of military spending on economic growth are explored. In addition to the traditional crowding-out effect, we show that the portfolio effect also plays an importance role in determining growth rate in a small open economy. We find that there exists a non-linear relationship between the defense burden and the economic growth.

Keywords: Military spending; Stochastic growth; Small open economy (search for similar items in EconPapers)
JEL-codes: H5 O4 (search for similar items in EconPapers)
Date: 2015-10-02
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