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The Impact of Military Spending on Civilian Investment and Real Output

The Impact of Military Spending on Civilian Investment and Real Output

We discuss how increased military spending by the government is often accompanied by a decrease in investment spending on civilian purposes, which negatively impacts the growth of real output. While there is some interconnection between the civilian and military sectors, such as in manufacturing, military spending can also create bottlenecks in labor markets and contribute to rising wage levels.

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