ABSTRACT
This chapter provides additional evidence to support the findings of the effect of military spending on the rate of profit from the panel analyses discussed in the previous chapter. To this end, the chapter uses an autoregressive distributed lag model (ARDL) Bounds Test and the Toda-Yamamoto method, non-linear ARDL, and Markov Switching method to provide evidence based on the time-series analyses. The chapter examines the U.S., as the biggest military spender, and 30 other major countries for 1950–2016, utilising alternative rates of profits in addition to the Penn World Tables (PWT) and the Extended Penn World Tables (EPWT). Regarding the U.S. for the whole period, the findings suggest that, military spending was an important stimulant of capital accumulation, although not very strong. During the post-1980 period, on the other hand, the findings suggest that military spending was more likely to have an insignificant or negative impact. Regarding the other major countries, the overall results are very similar for different profit variables (i.e. EPWT and PWT), suggesting that military spending is more likely to have a negative than positive effect on the rate of profit. Finally, the results show that military spending is more likely to have a negative impact in arms-importing countries.
