IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v47y2003i5p574-593.html
   My bibliography  Save this article

The Political and Economic Sources of Inflation in the American Military Budget

Author

Listed:
  • Benjamin O. Fordham

    (Department of Political Science University at Albany, SUNY)

Abstract

Three complementary explanations are tested for the phenomenon that, since 1940, the inflation rate for military goods and services has been higher on average than the inflation rates for the nonmilitary government sector or the economy as a whole. First, higher rates of public-sector inflation are often attributed to the low productivity of labor-intensive government activities compared with the relatively capital-intensive private sector. Because military goods and services are not necessarily labor intensive, however, this pattern explains only a small part of military inflation. A second, more important, consideration is that rapid buildups in military spending, usually associated with wars, lead to high inflation. For political reasons, however, retrenchments at the ends of wars do not produce a corresponding drop in prices, leading to higher average inflation over time. Finally, there is evidence that the Pentagon's interest in higher military spending may have influenced the construction of the deflator series.

Suggested Citation

  • Benjamin O. Fordham, 2003. "The Political and Economic Sources of Inflation in the American Military Budget," Journal of Conflict Resolution, Peace Science Society (International), vol. 47(5), pages 574-593, October.
    • Handle: RePEc:sae:jocore:v:47:y:2003:i:5:p:574-593
    DOI: 10.1177/0022002703257126
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0022002703257126
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0022002703257126?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gordon, Robert J, 1980. "A Consistent Characterization of a Near-Century of Price Behavior," American Economic Review, American Economic Association, vol. 70(2), pages 243-249, May.
    2. Beck, Morris, 1979. "Public Sector Growth: A Real Perspective," Public Finance = Finances publiques, , vol. 34(3), pages 313-356.
    3. Browning, Edgar K, 1987. "On the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 77(1), pages 11-23, March.
    4. Katharine G. Abraham & John S. Greenlees & Brent R. Moulton, 1998. "Working to Improve the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 27-36, Winter.
    5. Hans-Christian Cars & Jacques Fontanel, 1987. "Military Expenditure Comparisons," Post-Print hal-02957036, HAL.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    7. Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
    8. Baumol, W.J., 1993. "Social Wants and Dismal Science: The Curious Case of the Climbing Costs of Health and Teaching," Working Papers 93-20, C.V. Starr Center for Applied Economics, New York University.
    9. Huther, Jeff, 2000. "Relating Labor Productivity to Wages in Service Sectors: A Long-Run Approach," Economic Inquiry, Western Economic Association International, vol. 38(1), pages 110-122, January.
    10. Hans Christian Cars & Jacques Fontanel, 1987. "Military Expenditure Comparisons," International Economic Association Series, in: Christian Schmidt & Frank Blackaby (ed.), Peace, Defence and Economic Analysis, chapter 12, pages 250-265, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shin-Jen Tzeng & Ching-Chong Lai & Chun-Chieh Huang, 2008. "Does Military Expenditure Matter For Inflation And Economic Growth?," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(6), pages 471-478.
    2. Lin Hung-Pin & Tsung-Li Wang & Cheng-Lang Yang, 2016. "Further Causality Evidence on Arms Race, Inflation and Economic Growth," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 50(2), pages 123-136.
    3. Rosella Cappella Zielinski & Benjamin O Fordham & Kaija E Schilde, 2017. "What goes up, must come down? The asymmetric effects of economic growth and international threat on military spending," Journal of Peace Research, Peace Research Institute Oslo, vol. 54(6), pages 791-805, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mick Silver & Saeed Heravi, 2003. "The Measurement of Quality-Adjusted Price Changes," NBER Chapters, in: Scanner Data and Price Indexes, pages 277-316, National Bureau of Economic Research, Inc.
    2. Mick Silver & Saeed Heravi, 2004. "Hedonic Price Indexes and the Matched Models Approach," Manchester School, University of Manchester, vol. 72(1), pages 24-49, January.
    3. Christos Ioannidis & Mick Silver, 2003. "Chained, exact and superlative hedonic price changes: estimates from microdata," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1005-1014.
    4. Jacques Fontanel, 1993. "Le désarmement dans l'histoire des faits et des pensées économiques," Post-Print hal-03183984, HAL.
    5. Jacques Fontanel, 2011. "Ethique et économie," Post-Print hal-03123315, HAL.
    6. Jacques Fontanel, 2020. "Une croissance économique sans progrès humain," Post-Print hal-03709037, HAL.
    7. Jacques Fontanel, 1993. "Les principes du désarmement," Post-Print hal-03542595, HAL.
    8. Silver, Mick & Heravi, Saeed, 2005. "A Failure in the Measurement of Inflation: Results From a Hedonic and Matched Experiment Using Scanner Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 269-281, July.
    9. Jacques Fontanel, 1995. "Le désarmement pour le développement," Post-Print hal-03328523, HAL.
    10. Ernst R. Berndt & David M. Cutler & Richard Frank & Zvi Griliches & Joseph P. Newhouse & Jack E. Triplett, 2001. "Price Indexes for Medical Care Goods and Services -- An Overview of Measurement Issues," NBER Chapters, in: Medical Care Output and Productivity, pages 141-200, National Bureau of Economic Research, Inc.
    11. Jacques Fontanel, 1989. "The competitive Bidding of French arms industry," Post-Print hal-03163615, HAL.
    12. Victor Ginsburgh & Jianping Mei & Michael Moses, 2006. "On the computation of art indices in art," ULB Institutional Repository 2013/7290, ULB -- Universite Libre de Bruxelles.
    13. Felix Hammermann & Mark Flanagan, 2009. "What explains persistent inflation differentials across transition economies?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 297-328, April.
    14. Jacques Fontanel & Myriam Donsimoni, 1999. "Les dépenses militaires et les exportations d’armes des pays de l’ex Pacte de Varsovie de 1991 à 1996," Post-Print hal-03154061, HAL.
    15. Silver, Mick & Heravi, Saeed, 2005. "A Failure in the Measurement of Inflation: Results From a Hedonic and Matched Experiment Using Scanner Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 269-281, July.
    16. Jacques Fontanel, 1992. "Désarmement et économie," Post-Print hal-02865091, HAL.
    17. Renate Schubert, 1998. "Indikatoren für Nachhaltigkeit," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 134(III), pages 391-414, September.
    18. Jacques Fontanel, 2018. "Is Russia still a superpower?," Post-Print hal-03366254, HAL.
    19. Matthew Brzozowski, 2006. "Does One Size Fit All? The CPI and Canadian Seniors," Canadian Public Policy, University of Toronto Press, vol. 32(4), pages 387-412, December.
    20. Jacques Fontanel, 2017. "La sécurité nationale Un bien collectif économique et humain indispensable," Post-Print hal-03177181, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jocore:v:47:y:2003:i:5:p:574-593. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.