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The Military Expenditure – Economic Growth Nexus Revisited: Evidence from the United Kingdom

Author

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  • Hanson Robert

    (United Kingdom Royal Air Force, London, UK)

  • Jeon Joo Young

    (Department of Economics, 6816 University of Reading , Reading RG6 6AA, UK)

Abstract

The relationship between government defence expenditure and economic growth is a debated topic. This study uses UK data for the period of 1960–2012 and applies two of the most prevailing theories used within the literature, the ‘Feder-Ram’ and the ‘augmented Solow’ models, to assess this question. We utilise traditional model specifications, alongside extensively altered versions of both models, enabling a comprehensive comparison between them. The alterations to the models include re-evaluating how core variables are expressed, inclusion of measures of conflict, the impact of recession, etc. The results show that the augmented Solow model outperforms the Feder-Ram model, and we provide some explanations for this result. In addition, our results suggest that military expenditure has a positive effect on economic growth within the UK, implying that the decision to reduce defence spending may have been detrimental to the UK economy.

Suggested Citation

  • Hanson Robert & Jeon Joo Young, 2024. "The Military Expenditure – Economic Growth Nexus Revisited: Evidence from the United Kingdom," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 30(2), pages 207-248.
    • Handle: RePEc:bpj:pepspp:v:30:y:2024:i:2:p:207-248:n:1004
    DOI: 10.1515/peps-2023-0059
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    More about this item

    Keywords

    military expenditure; economic growth; UK; Feder-Ram; augmented Solow;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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