Time-series Estimates of the Macroeconomic Impact of Defence Spending in France and the UK

Stephen Martin, Ronald Smith, Jacques Fontanel and H. Haan
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Jacques Fontanel: CEDSI
H. Haan: Rijksuniversiteit

Chapter 16 in Peace, Defence and Economic Analysis, 1987, pp 342-362 from Palgrave Macmillan

Abstract: Abstract Measures of the effect of military expenditure on the economy had tended to rely on input-output or international cross-section models rather than time-series estimates. This chapter presents small simultaneous time-series models to estimate the effect of military expenditure on investment unemployment and growth in France and the UK. The impact and long-run multiples are calculated from the restricted and unrestricted reduced forms and the results compared. The relative advantages of time-series-based estimates as compared with other methods are then assessed. The main results suggest that military expenditure tends to reduce investment and increase unemployment. It has a positive immediate effect on growth, but when the system feedbacks are taken into account the net effect is negative.

Keywords: Military Expenditure; Structural Coefficient; Defence Spending; Fixed Capital Formation; Unemployment Equation (search for similar items in EconPapers)
Date: 1987
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DOI: 10.1007/978-1-349-18898-7_16

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