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Keywords:

  • economic growth;
  • government spending;
  • semiparametric model;
  • USA;
  • C14;
  • C22;
  • H50;
  • H56

ABSTRACT

Given its significant policy implications, the nexus between public expenditures and economic growth has been the subject of an extensive and often emotive theoretical and empirical debate. In this paper, a semiparametric model is used to explore the link between GDP and defence and non-defence government spending in the USA over the period 1929–2009. Evidence reported herein indicates that the latter represents a greater stimulus vis-à-vis the former.