The demand for military expenditures: An international comparison

Abstract

Earlier studies have explained inter-country variations in the share of GNP devoted to military expenditures by international spillovers and by differences in the threat of attack related to relative incomes. In this paper, we use the theory of public choice to explain these differences. We attempt to measure the importance of both international spillovers and relative incomes, along with two other factors: the tax-price elasticity of demand and economies of scale in the consumption of security.We find that international spillovers are significant and positive, that the income elasticity of demand is greater than unity, that the tax-price elasticity of demand explains part of observed inter-country differences, and that there are considerable economies of scale in the consumption of military spending. Finally, between 1960 and 1975, there was apparently a substantial increase in the value which each country derived from a dollar of military spending by its allies. This phenomenon, which seems related to the increased importance of deterrent weapons, has tended to induce individual alliance members to reduce the share of their national income devoted to defense.

Military expenditures and political regimes: Evidence from global data, 1963–2000

“…Baliga, Lucca and Sjöström (2011) find that limited democracies are more war-oriented than autocracies. Dudley and Montmarquette (1981) use a sample of 38 developed and developing countries for the years 1960, 1970 and 1975. They find that political regime, designated by being a multi-party democracy or not, has no impact on military spending.…”

Burden sharing in the NATO alliance: An empirical test of alternative views

“…Following Dudley and Montmarquette (1981) and others we postulate a simple military expenditure equation: 3…”

“…To the extent that defense is a Samuelsonian public good internally, its marginal cost to an individual taxpayer will be a decreas- ing function of the nation's population. If this relationship is combined with a high tax price elasticity for defense, then defense spending will rise more than in proportion to population size (Dudley and Montmarquette, 1981). To test the two major alternate conceptions of alliance relationships, we have assembled a pooled time series cross-sectional data base consisting of all 15 NATO members for an eleven-year period 1974-1984.…”

Asia-Pacific Demand for Military Expenditure: Spatial Panel and SUR Estimates

“…In Equation (6), the vector of other factors includes the country's population and its trade openness. If population raises the ability to finance defense as more people can carry this burden, then defense demand may increase with a larger population (Dudley and Montmarquette 1981). By contrast, a larger population may negatively impact defense demand if a greater population base allows the country to substitute relatively cheap manpower for expensive capital defense equipment (Wang 2013).…”