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MILITARY SPENDING AND THE GROWTH-MAXIMIZING ALLOCATION OF PUBLIC CAPITAL: A CROSS-COUNTRY EMPIRICAL ANALYSIS.

In this paper we present an endogenous growth model to analyze the growth maximizing allocation of public investment among N different types of public capital. Using this general model of public capital formation, we analyze the stability of the long-run equilibrium and we derive the growth-maximizi...

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Published in:Economic Inquiry Vol. 49; no. 4; pp. 1029 - 1042
Main Authors: Kalaitzidakis, Pantelis, Tzouvelekas, Vangelis
Format: Article
Published: Wiley-Blackwell October 2011
Subjects:
Mathematical models
Military spending
Resource allocation > Mathematical models
Infrastructure (Economics)
Online Access:View this record in EBSCOhost
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      pub: Wiley-Blackwell
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        10.1111/j.1465-7295.2009.00242.x
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        atl: MILITARY SPENDING AND THE GROWTH-MAXIMIZING ALLOCATION OF PUBLIC CAPITAL: A CROSS-COUNTRY EMPIRICAL ANALYSIS.
      aug:
        au:
          Kalaitzidakis, Pantelis
          Tzouvelekas, Vangelis
      su:
        Mathematical models
        Military spending
        Resource allocation -- Mathematical models
        Infrastructure (Economics)
      sug:
        subj:
          Mathematical models
          Military spending
          Resource allocation -- Mathematical models
          Infrastructure (Economics)
      ab: In this paper we present an endogenous growth model to analyze the growth maximizing allocation of public investment among N different types of public capital. Using this general model of public capital formation, we analyze the stability of the long-run equilibrium and we derive the growth-maximizing values of the shares of public investment allocated to the different types of public capital, as well as the growth-maximizing tax rate (amount of total public investment as a share of GDP). Then we proceed with an empirical investigation of the theoretical implication of the model that both the effects of the shares of public investment and the tax rate on the long-run growth rate are non-linear, following an inverse U-shaped pattern. Using data of public investment in infrastructure and military capital formation, we derive empirical estimations that confirm the theoretical implications of the model. ( JEL E62, H56, O40). Reprinted by permission of the publisher.
      pubtype: Academic Journal
      doctype: Article
      src: R
    language: English
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