This paper examines a number of hypotheses about the determination of interest rates for the United States. In particular, we are most interested in the relative interest rate effects of changes in military and non‐military spending. We find that increases in military spending cause a significantly larger increase in interest rates than do increases in non‐military spending. These results are insensitive to alternative measures of the data, specifications of the interest rate equations and estimation procedures. Cuts in military spending can reduce the level of total government spending or can be transferred to other programs. Our results then suggest that the crowding out of private expenditures can be reduced when government shifts resources from military to non‐military spending.
Military spending and interest rates
Reprints and Corporate Permissions
Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?
To request a reprint or corporate permissions for this article, please click on the relevant link below:
Academic Permissions
Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?
Obtain permissions instantly via Rightslink by clicking on the button below:
If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.
Related research
People also read lists articles that other readers of this article have read.
Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine.
Cited by lists all citing articles based on Crossref citations.
Articles with the Crossref icon will open in a new tab.