TY - JOUR
T1 - Defence spending and unemployment rates
T2 - an empirical analysis for the OECD
AU - Paul, S.
PY - 1996
Y1 - 1996
N2 - The author uses a three-equation model to test various economic hypotheses regarding the relationship between unemployment rate and defence spending in 18 OECD countries during the period 1962-1988. It is revealed that the relationship which exists between unemployment rate and defence spending is not uniform across countries. Defence spending has a favourable impact on unemployment rate in Germany and Australia, whereas in Denmark it worsens the employment situation. In Australia, Germany and Belgium, non-defence spending and the unemployment rate are causally independent. Defence spending appears to act as a stablization tool in response to changes in the unemployment rate only in the UK. No significant causal relationship between unemployment rate and either type of spending is revealed in Japan, The Netherlands, Italy, Spain, Austria, New Zealand, Sweden, Canada and the US. A few cases of bi-directional causality between unemployment rate and defence/non-defence spending are observed. Possible explanations are given for the observed cross-country variability in causal relation.
AB - The author uses a three-equation model to test various economic hypotheses regarding the relationship between unemployment rate and defence spending in 18 OECD countries during the period 1962-1988. It is revealed that the relationship which exists between unemployment rate and defence spending is not uniform across countries. Defence spending has a favourable impact on unemployment rate in Germany and Australia, whereas in Denmark it worsens the employment situation. In Australia, Germany and Belgium, non-defence spending and the unemployment rate are causally independent. Defence spending appears to act as a stablization tool in response to changes in the unemployment rate only in the UK. No significant causal relationship between unemployment rate and either type of spending is revealed in Japan, The Netherlands, Italy, Spain, Austria, New Zealand, Sweden, Canada and the US. A few cases of bi-directional causality between unemployment rate and defence/non-defence spending are observed. Possible explanations are given for the observed cross-country variability in causal relation.
UR - http://www.scopus.com/inward/record.url?scp=0029908841&partnerID=8YFLogxK
U2 - 10.1108/01443589610109667
DO - 10.1108/01443589610109667
M3 - Article
SN - 0144-3585
VL - 23
SP - 44
EP - 54
JO - Journal of Economic Studies
JF - Journal of Economic Studies
IS - 2
ER -