This paper empirically tests the Keynesian hypothesis that government defence spending positively impacts on aggregate output, by using a long run equilibrium model for the US and the UK. Our contribution, with respect to previous works, is twofold. First, our inferences are adjusted for...

This paper empirically tests the Keynesian hypothesis that government defence spending positively impacts on aggregate output, by using a long run equilibrium model for the US and the UK. Our contribution, with respect to previous works, is twofold. First, our inferences are adjusted for...

This paper discusses the best way to formulate and estimate a dynamic econometric model when interest focuses mainly upon its long-run properties. Using results derived for the more general context of transformed regression models, it is shown how point estimates and the standard errors of...