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Authors

Peroff

Abstract

It is a truism that resources devoted to defense are unavailable for nondefense purposes. Investment in defense takes place partly by reducing civilian spending on consumer and capital goods through tax rates that are higher than they would otherwise be and partly by reducing government spending on non-defense programs. The purpose of this paper is to test for the existence and magnitude of the latter tradeoff over the years 1929-1971 in the United States. In particular, the analysis concerns the tradeoff between defense and three social welfare policies: health, public aid and housing. In addition, the analysis examines whether these tradeoffs differ during periods of war and peace.

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