Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Considering the post-Vietnam period from 1978-2003, this paper investigates whether military spending improves or worsens the economic well-being of citizens within the 50 American states. We test two competing perspectives that predict opposite effects of military spending on economic well-being. The military displacement perspective suggests that military spending competes with and displaces more beneficial private investment and causes adverse effects on the economy. On the other hand, the military Keynesianism argument suggests that state managers uses military spending as a countercyclical tool to reduce the deleterious effects of economic downturns and that its effects on the economy are generally positive. Using state-level, longitudinal data we find support for the military Keynesianism argument. Several implications of these findings are discussed.