Does military expenditure crowd out private investment? A disaggregated perspective for the case of France

Economic Modelling, 2015, vol. 46, issue C, 44-52

Abstract: This article explores the effects of military expenditure on private investment in France, for the period between 1980 and 2010. Using a Keynesian model, our empirical results reveal that military spending crowds out private investment, a result commonly accepted in the literature. However, our approach is original in that we use disaggregated data. Such an approach distinguishes between the effects of non-equipment expenditure which crowds out investment and those of equipment expenditure which crowds in investment. As a result, we show that military equipment and private investment are complementary to one other.

Keywords: Military expenditure; Investment; Cointegration; Crowding-out; Crowding-in (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:46:y:2015:i:c:p:44-52

DOI: 10.1016/j.econmod.2014.10.049

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