The Effects of the Defense Sector on the Productivity of Civilian Industry in the US and the USSR

Document Type

Article

Language

eng

Format of Original

18 p.

Publication Date

12-1993

Publisher

Elsevier

Source Publication

Journal of Comparative Economics

Source ISSN

1095-7227

Abstract

In this paper we estimate production functions in order to measure the effects of the defense sector on productivity in the civilian branches of U.S. and Soviet industry. The size of the defense sector is measured by a flow variable, annual expenditures, and a stock variable, the stock of military capital. For the United States, we use annual data from 1948 to 1985, and for the Soviet Union we use annual data from 1965 to 1987. The results of the estimation procedure provide strong support for the hypothesis that increases in the flow of defense expenditures provide a short-term spur to civilian industrial productivity in both countries during the period under investigation. The supply-side crowding-out hypothesis is also supported, and as expected, support is weaker in short-term estimates than in long-term estimates.

Comments

Journal of Comparative Economics, Vol. 17, No. 4 (December 1993): 768-785. DOI.

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