Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models
This paper uses the neoclassical one-sector and two-sector models to examine the behavior of real interest rates in response to cutbacks on defense spending on capital goods and army personnel. It is demonstrated that while a permanent decline in defense spending on capital goods and military person...
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Institutional Knowledge at Singapore Management University
1992
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sg-smu-ink.soe_research-11812010-09-23T05:48:03Z Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models HOON, Hian Teck This paper uses the neoclassical one-sector and two-sector models to examine the behavior of real interest rates in response to cutbacks on defense spending on capital goods and army personnel. It is demonstrated that while a permanent decline in defense spending on capital goods and military personnel leaves the term structure unaffected in the one-sector model, the two-sector model predicts that the short and medium term real interest rates rise to give a downward-sloping yield curve when the capital goods producing sector is relatively labor-intensive. 1992-01-01T08:00:00Z text https://ink.library.smu.edu.sg/soe_research/182 info:doi/10.1016/0165-1765(92)90183-y Research Collection School Of Economics eng Institutional Knowledge at Singapore Management University Economics |
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Singapore Management University |
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SMU Libraries |
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Asia |
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Singapore Singapore |
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InK@SMU |
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English |
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Economics |
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Economics HOON, Hian Teck Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models |
| description |
This paper uses the neoclassical one-sector and two-sector models to examine the behavior of real interest rates in response to cutbacks on defense spending on capital goods and army personnel. It is demonstrated that while a permanent decline in defense spending on capital goods and military personnel leaves the term structure unaffected in the one-sector model, the two-sector model predicts that the short and medium term real interest rates rise to give a downward-sloping yield curve when the capital goods producing sector is relatively labor-intensive. |
| format |
text |
| author |
HOON, Hian Teck |
| author_facet |
HOON, Hian Teck |
| author_sort |
HOON, Hian Teck |
| title |
Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models |
| title_short |
Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models |
| title_full |
Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models |
| title_fullStr |
Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models |
| title_full_unstemmed |
Defense Spending Cutbacks and Real Interest Rates in the Neoclassical One-Sector and Two-Sector Models |
| title_sort |
defense spending cutbacks and real interest rates in the neoclassical one-sector and two-sector models |
| publisher |
Institutional Knowledge at Singapore Management University |
| publishDate |
1992 |
| url |
https://ink.library.smu.edu.sg/soe_research/182 |
| _version_ |
1770569058992783360 |