Does military expenditure crowd out private investment? A disaggregated perspective for the case of France

Julien Malizard

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Abstract: This article explores the effects of military expenditure on private investment in France, for the period between 1980 and 2010. Using a Keynesian model, our empirical results reveal that military spending crowds out private investment, a result commonly accepted in the literature. However, our approach is original in that we use disaggregated data. Such an approach distinguishes between the effects of non-equipment expenditure which crowds out investment and those of equipment expenditure which crowds in investment. As a result, we show that military equipment and private investment are complementary to one other.

Keywords: Investment; Crowding-out; Cointegration; Crowding-in; Military expenditure (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

Published in Economic Modelling, 2015, 46 (1), pp.44-52. ⟨10.1016/j.econmod.2014.10.049⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02272371

DOI: 10.1016/j.econmod.2014.10.049

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