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Defence spending, fiscal federalism, and economic growth in India: A new approach

Author

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  • Jean-Claude Berthelemy
  • Remy Herrera
  • Somnath Sen

Abstract

This paper proposes a new approach to the analysis of the military expenditure - growth nexus, applied to the case of India. Military expenditure has, first, a direct impact on the central government budgetary decisions, with a variety of crowding-out effects on other public spending. Second, there is an interaction with local government expenditure decisions in a federal state structure such as the Indian one, in particular through changes in the transfer of income from the central government to local governments. Third, all these fiscal decisions have an impact on growth through the accumulation of human capital and through infrastructure building. Government expenditure behaviours are estimated on Indian times series specifically built for this purpose, while their impact on growth are evaluated through simulations of a calibrated endogenous growth model of India.

Suggested Citation

  • Jean-Claude Berthelemy & Remy Herrera & Somnath Sen, 1999. "Defence spending, fiscal federalism, and economic growth in India: A new approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 10(4), pages 311-334.
    • Handle: RePEc:taf:defpea:v:10:y:1999:i:4:p:311-334
    DOI: 10.1080/10430719908404930
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    References listed on IDEAS

    as
    1. Rémy Herrera, 2007. "Developing Countries' External Debt," Post-Print hal-00275026, HAL.
    2. Jean-Claude Berthélemy & Robert S. McNamara & Somnath Sen, 1994. "The Disarmament Dividend: Challenges for Development Policy," OECD Development Centre Policy Briefs 8, OECD Publishing.
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