Economic Consequences of Lower Military Spending

Download or read book Economic Consequences of Lower Military Spending written by Tamim A. Bayoumi and published by . This book was released on 1993-03 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The IMF MULTIMOD model is used to trace the economic impact of a 20 percent reduction in world military expenditures. GDP falls in the short run, however private consumption and investment rise, leading to an increase in GDP in the medium and long run. The estimated gains to economic welfare are substantial, particularly for developing countries, although most of these gains are realized in the long run. A positive international economic externality is found to exist, implying that for any given country the economic gains from a coordinated reduction in military expenditures exceed the gains from a unilateral reduction.