Revisiting the guns-butter tradeoff: a wavelet analysis of the US and Britain

ABSTRACT

This study applies continuous wavelet analysis to examine defense-education and defense-healthcare relations in the US and Britain. It discovers four empirical patterns that have not been shown in the existing literature. First, the defense-welfare tradeoff rarely occurs at cycles less than 6 years and hence is not a short-run phenomenon. Second, very noticeable bilateral tradeoffs between education and defense can be detected. The effect, however, is more pronounced in the direction from education to defense. Third, the defense-welfare tradeoff is much less likely to occur in defense-healthcare relations than defense-education relations. Fourth, a structural change in the defense-healthcare relationship occurred during the 1960s, after which the defense-healthcare connection became primarily complementary. Together, the established patterns question the assumption that the defense sector has a dominant power in budget allocation. They also raise new theoretical and empirical questions demanding future research efforts.

KEYWORDS:

• Guns-butter tradeoff
• defense policy
• welfare policy
• government budget
• time series

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Funding

Xi'an Jiaotong-Liverpool University provides the financial support for the open-access publication of this article.

Notes on contributors

Yu Wang

Yu Wang received his Ph.D. in politics from New York University in 2009. Since then, he has worked at the Chinese University of Hong Kong (2009–2015), the University of Nottingham Ningbo China (2015–2017), and the University of Iowa (2018–2020). He is currently an assistant professor of international studies at Xi’an Jiaotong-Liverpool University. He has published 15 refereed articles.