Military spending and stochastic growth

Liutang Gong and Heng-Fu Zou ()

No 57, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: This study examines capital accumulation, military spending, arms accumulation, and output growth in a stochastic endogenous growth model. The analysis shows that higher (lower) growth in foreign military spending leads to faster (slower) economic growth in the home country if the home country¡¯s intertemporal substitution elasticity in consumption is smaller (larger); but more volatility in foreign military spending can lead to higher economic growth in the home country when its intertemporal substitution elasticity is large. In addition, shocks to output production may stimulate economic growth.

Keywords: Military spending; Arms race; Capital accumulation; Stochastic growth (search for similar items in EconPapers)
JEL-codes: E20 E22 H56 O10 O40 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2001
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Citations: View citations in EconPapers (1)

Published in Journal of Economic Dynamics & Control 28 (2003) 153 ¨C 170

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Journal Article: Military spending and stochastic growth (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:57

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