chapter  2
Economic models of the military expenditure-growth nexus
WithAdem Yavuz Elveren
Pages 14

This chapter presents the major economic models explaining the effect of military spending on economic growth, a highly popular topic in defence economics. Military spending may have a positive effect on economic growth, primarily by boosting aggregate demand, or a negative impact, mainly by crowding out public and private investments. Since Benoit’s seminal work in 1973, different growth models have been used to explain the nexus of military spending and economic growth. Most of these models do not assign an explicit role for military spending. Causality tests are also commonly used to explain this relationship. The chapter briefly presents these models and the extensive literature, which yields conflicting results on the effects of military spending on economic growth.