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Military Spending and Economic Growth in An Augmented Solow Model: A Panel Data Investigation for OECD Countries

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  • Hou Na

    (Institute of Defence Economics and Management, Central University of Finance and Economics, Beijing 100081, China)

  • Chen Bo

    (Institute of Defence Economics and Management, Central University of Finance and Economics, Beijing 100081, China)

Abstract

The defence-growth nexus has been investigated by many studies and has always been a controversial area of research. By applying an Augmented Solow Growth Model integrated with a military burden variable, this paper examines the effect of military expenditure on economic growth for 21 OECD countries during the period 1960–2009. Different panel estimation methodologies are used to analyze the economic effects of military expenditure. The empirical results suggest that military expenditure would appear to have a negative effect on growth.

Suggested Citation

  • Hou Na & Chen Bo, 2014. "Military Spending and Economic Growth in An Augmented Solow Model: A Panel Data Investigation for OECD Countries," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(3), pages 395-409, August.
    • Handle: RePEc:bpj:pepspp:v:20:y:2014:i:3:p:15:n:4
    DOI: 10.1515/peps-2014-0016
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