By Patrick Royal
There has been substantial investigation into the influence of government spending in general on economic growth, unemployment, and inequality, but relatively little investigation into the relative effects of different types of spending. This thesis attempts to separate the influence of military and non-military government spending on the economy. As with many such investigations, it focuses on a single economy – that of the United States. The results indicate that, dollar for dollar, military spending is just as effective as non-military spending at affecting unemployment, but much more effective at promoting short-term growth. Neither type of spending has a strong impact on income inequality, suggesting that the primary determinants of that are not related to government spending.
Advisor: Craig Burnside | JEL Codes: E1, E12, E62 | Tagged: