The demand for Canadian defence expenditures

Abstract

This paper presents an analysis of the determinants of the demand for Canadian military expenditures through the estimation of a demand for defence expenditures model for the time period 1952-2001 using, among others, the auto-regressive distributed lag approach to cointegration (ARDL) to estimate and test cointegration and long run relationships. The findings suggest that Canadian defence spending is determined by NATO's (Europe) defence spending, that of the US to a lesser extent, relative price effects and opportunity cost considerations. In light of the fact that Canada's national, foreign and defence interests are tied to international organizations and bilateral arrangements, the results are not surprising.ARDL models, Joint product model, NATO, Relative price effects, Demand models,

Defence Budgets in the Post-Cold War Era: A Spatial Econometrics Approach

“…Nikolaidou (2008) examines the demand for defence spending in the European Union from 1961 to 2005, Solomon (2005) examines Canadian defence spending from 1952 to 2001, Looney and Frederiksen (2000) examines defence spending in Latin America from the 1970s through to the mid 1990s, and Douch and Solomon (2014) examines defence spending for Middle Powers between 1955 and 2007. My focus here is solely on the post-Cold War period, as the end of that conflict was the beginning of a new paradigm in global relations.…”

Country Survey Xxi: The United Kingdom

“…Further strategic factors included are dummies for the Cold War (CWDUM), 2 Military expenditure should also depend on the prices of military and civilian output. The price of military output is simply not available for the UK, but its omission may be important: Solomon (2005) finds it to be significant in Canada. In order to economise on the number of regressors, civilian price levels are not included explicitly, but where appropriate real variables are used.…”

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

“…Moreover, the defense spillover variable is a weighted sum of the sample countries' defense spending levels, where the weights depend on some measure of connectivity, such as contiguity or nearness. This ME approach characterizes defense demand estimates by Douch and Solomon (2014), George and Sandler (forthcoming), Murdoch and Sandler (1984), Solomon (2005), and many others. Some recent spatial panel estimates of defense demand take an inductive approach and use military burdens as the dependent variable.…”

“…This is shown to be the case in a SIPRI (1983) study. However, Solomon (2005) finds that military goods inflate at a higher rate than civilian goods for Canada.…”

“…With this alternative representative for spillovers, the social welfare function could be written as U i y i , q i , Q −i1 , Q −i2 , , or some variant, where q i and Q −i1 are summed if country i is allied with group 1 but not with group 2, i.e. Solomon's (2005) inclusion of relative prices has a minimal effect on his long-run demand estimates. 9.…”