Military Spending, the Peace Dividend, and Fiscal Adjustment

ByBenedict J. Clements, Jerald A Schiff, Peter Debaere, Hamid R Davoodi

July 1, 1999

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The end of the Cold War has ushered in significant changes in worldwide military spending. This paper finds that the easing of (1) international tensions, (2) regional tensions, and (3) the existence of IMF-supported programs are related to lower military spending and a higher share of nonmilitary spending in total government outlays. These factors account for up to 66 percent, 26 percent, and 11 percent of the decline in military spending, respectively. Furthermore, fiscal adjustment has implied a larger cut in military spending of countries with IMF-supported programs.

Subject: Balance of payments, Current account surpluses, Defense spending, Econometric analysis, Estimation techniques, Expenditure, Total expenditures

Keywords: Current account surpluses, Defense spending, equation from the government spending equation, Estimation techniques, fiscal adjustment, Global, international tension, military spending, peace dividend, police expenditure, spending datum, spending-GDP ratio, Total expenditures, WP

Pages:
32
Volume:
1999
DOI:
https://doi.org/10.5089/9781451851007.001
Issue:
087
Series:
Working Paper No. 1999/087
Stock No:
WPIEA0871999
ISBN:
9781451851007
ISSN:
1018-5941

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