Foreign Military Threat and Endogeonus Growth in a Small Open Economy

• Main Authors: Jen-tse Kao, 高仁澤
• Other Authors: Wen-ya Chang
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/52183847011770732205

碩士 === 輔仁大學 === 經濟學研究所 === 97 === This paper makes extension of Shieh et al. (2007) to a small open economy and examines the impact of foreign military threat on domestic economic growth rate under the assumptions concerning perfect and imperfect world capital market. The findings are: under the perfect world capital market assumption, foreign military threat has no effect on domestic economic growth rate. This result greatly contrasts with the result in Shieh et al. (2007); however, under the imperfect world capital market assumption, the impact of foreign military threat depends on whether the coefficient of relative risk aversion is greater than 1. Precisely speaking, when the coefficient of relative risk aversion is greater (smaller) than 1, a rise in foreign military threat would raise (reduce) domestic economic growth rate. This result is compatible with the result in Shieh et al. (2007).