Defense spending and the macroeconomy |
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Authors: | James E Payne Kevin L Ross |
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Institution: | 1. Department of Economics , Oakland University , Rochester, MI, 48309–4401, USA;2. Department of Economics , University of North Carolina—Wilmington , Wilmington, NC, 28403–3297, USA |
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Abstract: | Given Kinsella's (1990, 1991) appeal for analysis to be pursued using sub‐annual level of data, we pursue such an endeavor in this paper. We examime the effect of defence spending on real output, the unemployment rate, price level, and interest rate covering a quarterly time frame 1960:1 to 1988:1 using an unrestricted vector autoregression framework. Our results parallel the findings of Kinsella in that there appears no causal relationship in either direction between defence spending and economic performance. |
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Keywords: | Defence spending macroeconomy cointegration VAR |
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