Effects of defense spending on the Texas economy: An example of concave programming

The projected defense buildup by the Reagan Administration through 1937 will provide strong stimulus to the Texas economy. In this paper, we provide numerical estimates of the emerging additional output and the number of jobs in 173 productive sectors of the state's economy. The calculations are carried out inside the framework of a new concave programming format which makes it possible to compare the need for labor in 23 aggregate sectors with the projected available workforce. In sectors with scarce labor supply, wages will start to rise. The general price level will then also rise from the cost side. Appropriated defense dollars will then buy less real goods and services than originally envisaged. The model was solved using a computer code for successive linear programming. The computations represent one of the larger applications of this particular computer code to date.