Analyze the Interaction of Expenditure on Military Investment and Military Maintain to Taiwan''s Economic Growth

• Main Authors: Jui-chang Chen, 陳瑞章
• Other Authors: 陳禮潭, 張明宗
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/09750396639801967958

碩士 === 國立中央大學 === 產業經濟研究所碩士在職專班 === 95 === In the face of the military threaten of Mainland China, the relationship between national defense expenditure and economic growth is an interesting issue in Taiwan. The purpose of this thesis is constructing two macroeconomics models to distinguish the spillover and monopoly effects of defense expenditure on economic growth. The first model we built is under the framework of Ram-Biswas (1986), furthermore, we extend the model in four sectors and use Cobb-Douglas production function to analyze the interaction among non-government, military sector (military investment and military maintain), and non- military government sector. The second model we built is under the framework of Total Factor Productivity. In addition, we study the interaction among R&D, international trade and military sector. Adopting ADF unit root test, we used the yearly data from 1974 to 2005 and observed that the growth rate of expenditure on military investment and military maintain both are stationary. To avoid endogenous problem in estimation, we use Generalied Method of Moment and Granger causality test to identify the relationship among variables within two models. The empirical result is as follows. The expenditure on military investment and military maintain both are positive relate with economic growth. However, spillover effect of military sector on R&D is not conspicuous. We conclude that the expenditure of military sector is not totally crowd out private sector investment; it may support some economic growth. The challenge of later researches is how to identify the channel which is spillover effect of military sector on other non-government sector.