TY - JOUR PY - 1993// TI - U.S. Military expenditure and the dollar: Another look JO - Defence economics A1 - Olszewski, Edward A. A1 - Payne, James E. A1 - Ross, Kevin L. SP - 249 EP - 258 VL - 4 IS - 3 N2 - This paper re-examines the relationship between U.S. defense spending and the dollar-mark exchange rate during the 1960:1 to 1990:4 period. Previous work, under the guise of the “safe haven” argument, finds a cointegrating relationship between real military expenditures, real output and the real dollar-mark exchange rate. Here, we examine the dynamic time series properties of a cointegrated vector autoregression under a more traditional real exchange rate specification. Through various restrictions placed upon the estimated cointegrating vector, we test specific hypotheses about the long-run relationships between the variables. Our results reveal that previous work suggesting that military expenditures may significantly affect the real dollar exchange rate value may be misleading.

LA - SN - 1043-0717 UR - http://dx.doi.org/10.1080/10430719308404764 ID - ref1 ER -