Defense Spending Promotes Aggregate Output in the United States--Evidence from Cointegration Analysis

This paper provides new evidence on the question of the effects of defense spending on aggregate output in the United States. Earlier studies of this basic issue relied on traditional econometric techniques and the neoclassical production function theory. In this paper, recently developed cointegrat...

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Bibliographic Details
Published in:Defence and peace economics 2002-02, Vol.13 (1), p.55-60
Main Author: Atesoglu, H. Sonmez
Format: Article
Language:English
Subjects:
Aggregate Output
Armed forces
Cointegration Analysis
Conflict
Defence industry
Defence policy
Defense Spending
Economics
Military expenditure
National security
U.S.A
Weapons
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Summary:This paper provides new evidence on the question of the effects of defense spending on aggregate output in the United States. Earlier studies of this basic issue relied on traditional econometric techniques and the neoclassical production function theory. In this paper, recently developed cointegration methodology and modeling that is inspired by new macroeconomic theory is employed. The results from earlier studies concerning the effects of defense spending are mixed. The findings presented in this paper reveal that there is a quantitatively important and positive relation between defense spending and aggregate output in the United States.
ISSN:1024-2694
1476-8267
DOI:10.1080/10242690210963