Defense Budget Growth and Inflation: A Wavelet-Based Study of the U.S. and Britain


12:00 PM - 1:00 PM


  • Time: 12:00-1:00 PM
  • Date: Thursday 21, October 2021
  • Venue: HS436


Despite the extensive theoretical connections between defense budget growth and inflation, empirical findings based on traditional time-domain methods have been inconclusive. This study reexamines the issue from a time-frequency perspective. Applying continuous wavelet analysis to the U.S. and Britain, it shows consistent evidence in support of positive bilateral effects in both cases. In the U.S., defense budget growth promoted inflation at 2-4 year cycles in the 1840s and at 8-24 year cycles between 1825 and 1940. Conversely, inflation accelerated the growth of defense spending at 5-7 year cycles in the 1830s and at 25-64 year cycles between 1825 and 1940. In Britain, defense budget growth spurred inflation at 8-48 year cycles between 1890 and 1940 and at 50-65 year cycles between 1790 and 1860. Inflation fueled the growth of defense spending at 7-20 year cycles between 1840 and 1870, in the 1940s, and in the 1980s.


Dr Yu Wang received his PhD in politics from New York University in 2009. Since then he has worked at the Chinese University of Hong Kong (2009-2015), the University of Nottingham Ningbo China (2015-2017), and the University of Iowa (2018-2020). He is currently working in the Department of International Studies at the Xi'an Jiaotong-Liverpool University.

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