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Endogenous Growth and Defense Expenditures: A New Explanation of the Benoit Hypothesis |
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| Authors: | Ching-chong Lai Jhy-yuan Shieh Wen-Ya Chang |
| Affiliation: | 1. Department of Economics , Chinese Culture University , Taiwan;2. Sun Yat-Sen Institute for Social Sciences and Philosophy , Academia Sinica , Taiwan;3. Institute of Economic , Academia Sinica , Taiwan;4. Department of Economics , National Taiwan University , Taiean;5. Department of Economics , Fu-Jen Catholic University , Taiwan |
| Abstract: | This paper develops an endogenous growth model to examine the linkage between military expenditures and economic growth. We adopt the modeling strategy where both the supply side and the demand side effects of national defense are taken into considerations. Our result finds that a rise in military spending tends to stimulate the sustained growth rate, confirming Benoit's famous empirical findings. |
| Keywords: | Benoit Hypothesis Endogenous Growth Defense Expenditures Elasticity Of Intertemporal Substitution |