Approved for public release; distribution is unlimited / This thesis evaluates the impact of spending by the Department of Defense and the Federal Government upon the economic growth of the states in which funds are expended. A pooled cross-section and time-series analysis is performed on a data base describing the period 1976-1985 and including the forty-eight contiguous states. Personal income is used as a proxy to measure economic growth. The econometric models are estimated using three separate regression methodologies. Consistent parameter estimates permit the author to conclude that Defense Investment spending is highly associated with economic growth. Defense Expense spending is less highly associated with growth. Federal spending other than for defense or intergovernmental aid to state and local governments exhibits an inconclusive relationship with economic growth. / http://archive.org/details/effectsofdepartm00anas / Lieutenant Commander, United States Navy

This dissertation studies the impact of several different housing market features on the macroeconomy. Chapter 1 augments the New-Keynesian model with collateral constraints to incorporate long-term debt in order to examine the interaction between multi-period loans, leverage, and indeterminacy. Allowing firms to borrow heavily against commercial housing by increasing the loan-to-value ratio from 0.01 to 0.90 reduces the level of steady state output approximately 3.19% and decreases social welfare. In contrast, increasing the debt limit of households increases steady state output by 2.72%. Social welfare is maximized under a utilitiarian function when households can borrow at a loan-to-value ratio of about 0.49. An economy with long-term debt also makes stabilization much more difficult for monetary policymakers because determinacy is harder to attain. Instead of only having to satisfy the Taylor Principle (which implies that a more than one-to-one response to inflation), central bankers must either use a strict inflation target or aggressively respond to inflation and the output gap to ensure determinacy. Chapter 2 examine a New-Keynesian model with housing where default occurs if housing prices are sufficiently low, resulting in a loss of access to credit and housing markets. Default decreases aggregate and patient household consumption, increases impatient household consumption, and amplifies the decline in housing prices due to a misallocation of housing. The effects on consumption often peak immediately before default occurs. Policies that prevent underwater borrowing or raise interest rates along with housing prices are generally desirable because they increase utilitarian social welfare. This paper shows that default is not simply a symptom of economic downturns, but a cause. Chapter 3 explores the correlation between the home mortgage interest deduction (HMID) and state economic growth. The HMID was introduced to incentivize home purchases by distorting the after-tax price, resulting in an overinvestment in real estate. Previous empirical work has shown that investment in physical capital increases economic growth more so than investment in structures. Theoretically, the anticipated effect of the HMID would be lower subsequent economic growth. However, this paper finds that residential housing is actually beneficial for economic growth.

The paper focuses on the welfare state, which is enjoying the favor on the one hand and facing the strong criticism on the other hand. The work aims to assess the relationship of the social expenditure share in GDP and the GDP growth in the selected European countries, namely Sweden, Germany and Great Britain. Within the solution of this question the work focuses first on the theory of the welfare state and the state intervention approaches applied in the exercise of social policy. Further the work points to the adverse effects of the social policy. In the applied part the paper analyzes the countries in terms of the structure of social expenditures, their share in GDP and the GDP growth in the period. The paper focuses particularly on the relationship of the share of social expenditures in GDP and the GDP growth. In all three cases the demonstration of the dependence of observed variables based on correlation analysis failed. At the conclusion the work provides evaluation of the relationship of the social expenditure share in GDP and the unemployment rate, where the dependence of both indicators was confirmed.

Development economists generally argue that poor countries at their early stages of development are often faced with limited domestic resources for development, and can therefore borrow from the developed nations to boost their rate of growth and development. This financing gap problem, which is based on the Harrod-Domar growth theory, has made developing countries, especially Sub-Saharan Africa, to accumulate large amount of external debt that they could no longer sustain. Moreover, there is now a growing concern that the large external debt service payment is retarding economic growth and investment in the heavily indebted poor countries (HIPCs), while also displacing current expenditure in priority sectors like health, education, and social infrastructure. This dissertation therefore, examines the impact of external debt on economic growth and investment in ECOWAS Sub-Saharan Africa over the period 1980-1999. Unlike the traditional debt and growth studies that use a-spatial methods, this study employs spatial autoregressive growth and investment models to determine the effects of spatial interaction and spatial dependence among ECOWAS countries during the period of the crisis. It is obvious that countries are spatial entities that interact with one another, and as such, the growth trends in one country may actually depend on the growth trajectories of others. Based on the above assumptions, the models use external debt service and total debt stock ratios, which are extracted from the World Bank and African Development Bank databases, as key or control variables plus other explanatory variables. The maximum likelihood estimation of both models yield mixed results across time. The results indicate the presence of both positive and negative spatial dependence in ECOWAS countries across time. While external debt service ratio is found to have an inverse relationship with economic growth in most periods under investigation, the total debt stock to GDP ratio only affect growth in fewer periods than expected. With regards to public investment, the external debt service ratio is found to have no impact on public investment in ECOWAS countries. However, the total debt stock to GDP ratio is found to have a negative relationship with public investment in most periods, which suggest that relying on foreign capital to boost growth and investment could be counter productive in Sub-Saharan Africa. (author's abstract)