National and Regional Economic Consequences of Swiss Defense Spending

Thomas Bernauer, Vally Koubi and Fabio Ernst
Additional contact information
Thomas Bernauer: Center for Comparative and International Studies, ETH Zurich
Vally Koubi: Department of Economics and Oeschger Center, University of Bern; and Center for Comparative and International Studies, ETH Zurich, vally.koubi@vwi.unibe.ch
Fabio Ernst: Swiss Armed Forces Planning Staff

Journal of Peace Research, 2009, vol. 46, issue 4, 467-484

Abstract: The effects of defense spending on economic performance and, in particular, on economic growth have been studied extensively in the literature. The empirical findings have been ambiguous so far, partly reflecting the econometric difficulties involved in the estimation of this relationship. The authors study the implications of Swiss defense spending for economic growth and unemployment in Switzerland, using both national aggregate and cross-sectional (cantonal) data. Such analysis may be more informative than similar analyses that rely on time series for individual countries (due to spurious time effects) or averages for different countries (due to strong cross country variation in country characteristics). The findings indicate that although defense spending has had a positive effect on the rate of economic growth of Switzerland in the presence of an external threat (Cold War), the distribution of defense spending across cantons has not contributed to the dispersion of cantonal growth rates. Nonetheless, cantons in which military employment is a large share of total employment have enjoyed lower and more stable unemployment rates. These findings suggest that in order to uncover the full implications of defense spending, it is necessary to go beyond the defense spending—growth nexus. The findings seem relevant for many other countries because the allocation of national defense employment and spending is rarely uniform across the regions of any country.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://jpr.sagepub.com/content/46/4/467.abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:joupea:v:46:y:2009:i:4:p:467-484

Access Statistics for this article

More articles in Journal of Peace Research from Peace Research Institute Oslo
Bibliographic data for series maintained by SAGE Publications ().