Does Military Expenditure Matter For Inflation And Economic Growth?
Author InfoShin-Jen Tzeng Ching-Chong Lai Chun-Chieh Huang Abstract This paper sets up a monetary endogenous growth model, and uses it to explain the ambiguous linkage between the military burden and the inflation rate observed in existing empirical studies. It is found that an expansion in the military burden has an ambiguous effect on the inflation rate depending upon the relative extent of two conflicting forces. More specifically, if the increase in the marginal benefit from holding money exceeds (falls short of) the increase in the marginal product of private capital, the inflation rate will rise (fall) in response. Moreover, it is found that an increase in the military burden will stimulate the balanced growth rate, confirming Benoit’s famous empirical findings. Download InfoTo download: If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of furthe
