{
  "title": "Military Spending and Crowding-Out Effects: Evidence from Sub-Saharan Africa",
  "publication": "IMF Working Papers, April 10, 2026",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2026/04/09/military-spending-and-crowding-out-effects-evidence-from-sub-saharan-africa-575178",
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  "summary": "This paper quantifies the effects of increases in military expenditures on education and health spending using local projections and different strategies to identify exogenous changes in military spending based on data for 33 sub-Saharan African (SSA) economies over the period 1990-2023.",
  "sections": [
    {
      "heading": "Scope and data",
      "content": "- Sample: 33 sub-Saharan African (SSA) economies.\n- Period covered: 1990-2023.\n- Publication: IMF Working Paper (Working Paper No. 2026/069; Pages: 35; Issue: 069; Volume: 2026; DOI: https://doi.org/10.5089/9798229042444.001)."
    },
    {
      "heading": "Methods and identification strategies",
      "content": "- Estimation approach: local projections.\n- Identification strategies applied:\n  - Shocks identified through military spending surges.\n  - Shocks identified through a fiscal reaction function.\n  - Instrumental variables (IV) estimates to address endogeneity concerns."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Results from surge-based specifications and fiscal reaction function specifications:\n  - Yield mixed results that typically are neither economically nor statistically significant.\n- Instrumental variables estimates:\n  - A one-standard-deviation increase in the share of military spending in total government expenditure reduces the shares of education and health spending by about 1 percentage point over the medium-term.\n- Timing and sectoral differences:\n  - Crowding-out effects tend to materialize sooner for health expenditures, likely because health has a larger discretionary component.\n  - Education spending exhibits more rigidities, delaying or muting immediate crowding-out effects.\n- Conditional findings:\n  - Military spending shocks tend to crowd-out health expenditures when access to international aid is limited.\n  - There is no evidence of crowding-out of health expenditures when aid is relatively amply available.\n- Non-significant factors:\n  - Overall debt levels are not significant determinants of the extent of crowding-out effects of military expenditure.\n  - The state of the business cycle is not a significant factor in determining crowding-out effects."
    },
    {
      "heading": "Policy-relevant implications",
      "content": "- Where international aid is limited, increases in military spending can meaningfully displace health spending in SSA, implying trade-offs for fiscal prioritization and external financing strategies.\n- The discretionary nature of health budgets suggests quicker budgetary adjustments to accommodate military spending shocks; education budgets may require targeted policies to protect spending given their rigidity.\n- Standard macro indicators such as overall debt levels and contemporaneous business-cycle conditions may not predict the extent of crowding-out; identification of external financing conditions (aid availability) is important for assessing social spending vulnerability to military shocks.\n\nMilitary Spending and Crowding-Out Effects: Evidence from Sub-Saharan Africa; Antonio David, Elisee Miningou, Rasmané Ouedraogo, Makoto Tanaka, Alex Vaval Pierre-Charles; April 10, 2026.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2026/04/09/military-spending-and-crowding-out-effects-evidence-from-sub-saharan-africa-575178"
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    "Authors: Antonio David, Elisee Miningou, Rasmané Ouedraogo, Makoto Tanaka, Alex Vaval Pierre-Charles",
    "Published: April 10, 2026",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229042444.001",
    "Sample: 33 sub-Saharan African (SSA) economies.",
    "Period covered: 1990-2023.",
    "Publication: IMF Working Paper (Working Paper No. 2026/069; Pages: 35; Issue: 069; Volume: 2026; DOI: https://doi.org/10.5089/9798229042444.001).",
    "Estimation approach: local projections.",
    "Identification strategies applied:",
    "Results from surge-based specifications and fiscal reaction function specifications:",
    "Instrumental variables estimates:",
    "Timing and sectoral differences:",
    "Conditional findings:",
    "Non-significant factors:",
    "Where international aid is limited, increases in military spending can meaningfully displace health spending in SSA, implying trade-offs for fiscal prioritization and external financing strategies.",
    "The discretionary nature of health budgets suggests quicker budgetary adjustments to accommodate military spending shocks; education budgets may require targeted policies to protect spending given their rigidity.",
    "Standard macro indicators such as overall debt levels and contemporaneous business-cycle conditions may not predict the extent of crowding-out; identification of external financing conditions (aid availability) is important for assessing social spending vulnerability to military shocks.",
    "**Working Paper**"
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