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DEFENSE SPENDING AND STATE ECONOMIC GROWTH *
Author(s) -
Mehay Stephen L.,
Solnick Loren M.
Publication year - 1990
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1990.tb00116.x
Subject(s) - economics , heteroscedasticity , investment (military) , estimation , econometrics , econometric model , aggregate (composite) , personal income , aggregate data , state (computer science) , cross sectional data , positive correlation , macroeconomics , statistics , medicine , materials science , mathematics , management , algorithm , politics , political science , computer science , law , composite material
Little evidence is currently available on the regional growth effects of federal defense spending. In this study, econometric models for state personal income and manufacturing employment between 1976 and 1985 are specified and estimated. Pooled cross‐sectional time‐series data are used, and the estimation procedure corrects for serial correlation, heteroscedasticity, and contemporaneous cross‐sectional correlation. The results indicate that aggregate defense spending has a positive effect on both growth measures. However, when defense expenditures are disaggregated, only investment‐type outlays appear to consistently affect state economic growth.