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An Econometric Contribution to the U.S. Defense—Growth Nexus: Evidence from Error Correction Model

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  • Rock-Antoine Mehanna

    (Department of Business Administration & Economics Wartburg College Waverly, Iowa, USA, Nelson Mandela School of Public Policy Southern University Baton Rouge, Louisiana, USA, rockantoine@hotmail.com or drmehanna11@yahoo.com)

Abstract

Past and contemporary research has examined the relationship between military spending and economic growth and has reported mixed results. These conflicting findings are perhaps due to the methodologies employed. Consequently, this study employs a simple, parsimonious New Growth model to investigate the link between military spending and economic growth in the United States over the period 1/1959—1/2001 by adopting a more robust estimation technique. It follows the Johansen co-integration and error correction methodology coupled with vector autoregression (VAR) and innovation accounting techniques. Findings are robustly substantiated and reveal that military spending and growth have neither a statistical nor an economic impact on each other. This suggests that current U.S. political debates opposing or favoring military spending on the grounds of its economic merit are irrelevant.

Suggested Citation

  • Rock-Antoine Mehanna, 2004. "An Econometric Contribution to the U.S. Defense—Growth Nexus: Evidence from Error Correction Model," Conflict Management and Peace Science, Peace Science Society (International), vol. 21(2), pages 121-131, April.
    • Handle: RePEc:sae:compsc:v:21:y:2004:i:2:p:121-131
    DOI: 10.1080/07388940490463906
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    References listed on IDEAS

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    Cited by:

    1. Uk Heo & John Bohte, 2012. "Who Pays for National Defense? Financing Defense Programs in the United States, 1947–2007," Journal of Conflict Resolution, Peace Science Society (International), vol. 56(3), pages 413-438, June.
    2. Khalid Zaman, 2019. "Does higher military spending affect business regulatory and growth specific measures? Evidence from the group of seven (G-7) countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 323-348, April.
    3. Jeffrey Smith & M. H. Tuttle, 2008. "Does Defense Spending Really Promote Aggregate Output In The United States?," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(6), pages 435-447.

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