Document Type

Article

Language

eng

Publication Date

Summer 1987

Publisher

College of Business Administration, University of Nebraska, Lincoln

Source Publication

Quarterly Journal of Business and Economics

Source ISSN

0747-5535

Abstract

The hypothesis that rapid defense buildups contribute to inflation recently has been rejected by Donald F. Vitaliano. In this paper, it is argued that this result is misleading, given that it is obtained under the implausible assumption of constancy of the expected real rate of interest. The hypothesis is reexamined using a well-known measure of the expected inflation rate, and it is found that growth of defense spending has a statistically significant positive effect on the rate of price inflation.

Comments

Published version. Quarterly Journal of Business and Economics, Vol. 26, No. 3 (Summer 1987): 57-66. Permalink. © 1987 Creighton University College of Business. Used with permission.

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