 Defence R&D expenditure: The crowding-out hypothesisDefence and Peace Economics, 2002, vol. 13, issue 5, 365-383 Abstract: The impact of defence expenditure on the economy has been widely studied through different types of models. However, the results from these studies have not reached definitive conclusions, and have left a gap in the analysis of the impact of defence R&D expenditure at the economy level. Defence R&D has specific characteristics, which lead to market failures: public good, high risk and uncertainty, national security. Also, defence R&D creates two types of externalities: negative (crowding-out), and positive (spin-off). Crowding-out is the major economic debate about defence R&D. This paper analyses the crowding-out hypothesis by applying three types of models for the UK case: supply, demand, and demand-supply models. From these three models the most reliable is chosen and applied to the individual cases of France, Germany, Japan and USA. The paper also reports the results for the pooled data of these five countries, and for four error component models. The results from estimating such models shed light on the defence R&D crowding-out hypothesis. Keywords: Crowding-out; Defence R&D Spending; Growth; Investment; Demand Models; Supply Model; Demand-supply Models; Error Component Models (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:defpea:v:13:y:2002:i:5:p:365-383 Ordering information: This journal article can be ordered from Access Statistics for this article Defence and Peace Economics is currently edited by Professor Keith Hartley More articles in Defence and Peace Economics from Taylor & Francis Journals |
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