Abstract
This study examines the effects of military expenditure on investment in 13 selected OECD countries over the period of 1971–2012 by applying the Smith Demand-Side model and different estimation methodologies including panel data, cross section and time series estimation methods. Our empirical results reveal that military expenditure crowds out investment and that crowding-out effect lessens during the Post-Cold War period.
Acknowledgments
This paper was presented at the 14th Jan Tinbergen European Peace Science Conference, 23 June–25 June 2014, Den Haag, The Netherlands. We are grateful for valuable comments from participants of the conference. This paper is supported by the Centre for Fiscal Development of China, Central University of Finance and Economics.
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