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Exploring Potential Arms Races

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  • Carlos Seiglie

Abstract

Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat.

Suggested Citation

  • Carlos Seiglie, 1996. "Exploring Potential Arms Races," Economics and Politics, Wiley Blackwell, vol. 8(3), pages 231-240, November.
  • Handle: RePEc:bla:ecopol:v:8:y:1996:i:3:p:231-240
    DOI: 10.1111/j.1468-0343.1996.tb00129.x
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    References listed on IDEAS

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    1. Benoit, Emile, 1978. "Growth and Defense in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 26(2), pages 271-280, January.
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    5. Brito, D L, 1972. "A Dynamic Model of an Armaments Race," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(2), pages 359-375, June.
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    8. Hsiao, Cheng, 1981. "Autoregressive modelling and money-income causality detection," Journal of Monetary Economics, Elsevier, vol. 7(1), pages 85-106.
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    Cited by:

    1. Carlos Seiglie, 2016. "Openness of the economy, terms of trade, and arms," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 748-759, January.

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