ABSTRACT
The chapter examines the effect of military spending on the rate of profit, using a panel autoregressive distributed lag model (ARDL) for two major sets of the profit rate. The first set is the rate of profit calculated from the Penn World Tables, covering 31 major countries for 1950–2014. The second set is mainly based on the profit rate in the Extended Penn World Table, covering 27 countries for 1963–2008. The findings suggest that while military spending has a positive impact on the rates of profit for the whole period, there is no significant effect during the post-1980 era. The results of the empirical analyses show weak evidence for the differentiation between arms-exporting and arms-importing countries, in that while the effect of military spending on the rate of profit is positive in the former, it is negative in the latter.
