What Price Cold War? Military Spending and Private Investment in the U.S., 1946-1979

Michael Edelstein

Cambridge Journal of Economics, 1990, vol. 14, issue 4, 421-37

Abstract: Over the long haul U.S. military spending, 1946-79, came at the sacrifice of non-durable consumption expenditures, not investment expenditures. This conclusion is based on an examination of trends in the GNP shares of consumption, investment, government and net exports expenditures, 1889-1979. As U.S. defense expenditures moved to new secular heights in the late 1940s and 1950s, the component of U.S. national expenditure sacrificed was private, non-durable, consumption expenditures. When defense spending fell on trend in the 1960s and 1970s, public consumption expenditures rose. The mild negative correlation between military expenditures in the U.S. found by previous research appears to have been based on very brief crowding-out and crowding-in effects of the federal government's budgets in the first and last years of the Korean and Vietnam Wars. Copyright 1990 by Oxford University Press.

Date: 1990
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