An empirical analysis of turkey's defence‐growth relationships with a multi‐equation model (1956–1994)*

This study revisits the relationship between defence spending and economic growth via a Keynesian model in Pakistan using the autoregressive distributive lag bounds testing approach to cointegration. Empirical evidence suggests a stable cointegration relationship between defence spending and economic growth. An increase in defence spending reduces the pace of economic growth confirming the validity of Keynesian hypothesis in this case. Current economic growth is positively linked with economic growth of previous periods while a rise in nonmilitary expenditures boosts economic growth. Interest rate is inversely associated with economic growth. Finally, unidirectional causality running from military spending to economic growth is found.

Section: Introductionmentioning

confidence: 92%

Does Defence Spending Impede Economic Growth? Cointegration and Causality Analysis for Pakistan

Shahbaz

Afza

Shabbir

2013

“…A study focussing on apartheid South Africa was undertaken by Roux (1996Roux ( , 2000, using a Keynesian aggregate production function model. Other,studies include McMillan (1992), and 1 These studies include among others Feder, 1982;Smith, 1980;Deger and Smith, 1983;Lim, 1983;Faini, et al, 1984;Biswas and Ram, 1986;Deger, 1986;Joerding, 1986;Ram, 1986;Rasler and Thompson, 1988;Atesoglu and Mueller, 1990;Alexander, 1990;Chowdhury, 1991;Huang and Mintz, 1991;Ward et al 1991;Chletsos and Kollias, 1995;Antonakis, 1997;Sezgin, 1997Sezgin, , 1999Sezgin, , 2000Sezgin, , 2001Heo, 1999;Murdoch et al, 1997;Sandler, 2002a, 2002b;Ozsoy, 2000;Yildirim and Sezgin, 2002;Aizenman and Glick, 2006;Cuaresma and Reitschuler, 2006;Drèze, 2006;Kalaitzidakis and Tzouvelekas, 2007;Kollias et al, 2007;Yakovlev, 2007;Habibullah et al, 2008;Kentor and Kick, 2008;Dunne and Uye, 2009;Hirnissa et al, 2009;Dunne and Smith, 2010 Batchelor et al (2000b). 2 McMillan (1992) examines the link using a Feder Ram model based on a neoclassical production function for the period 1950-1985.…”

Section: Military Expenditure and Economic Growthmentioning

confidence: 99%

Military expenditure, economic growth and structural instability: a case study of South Africa

Aye

Balcılar

Dunne

et al. 2014

This paper makes two contributions to the growing literature on the military expenditureeconomic growth nexus. It provides a case study of a developing country, South Africa, and considers the possibilities of structural breaks in the relationship, applying newly developed econometric methods. Taking annual data from 1951 to 2010 and full sample bootstrap Granger non-causality tests, initially we find no causal link between military expenditure and GDP. Then, using parameter instability tests, the estimated VARs are found to be unstable. However, when a bootstrap rolling window estimation procedure is used to deal with time variation in the parameters, bidirectional Granger causality between the two series becomes evident in various subsamples. While military expenditure has positive predictive power for GDP at certain initial periods, it has negative predictive power at some later periods in the sample. Similar results were obtained for the causality running from GDP to military expenditure. These findings illustrate that conclusions based on the standard Granger causality tests, which neither account for structural breaks nor time variation in the relationship may be invalid.

“…On the other hand, Ozsoy (2000) found no significant effect of defence expenditures on economic growth when applying the same model to a slightly different period. Sezgin (2001) estimated this relationship again and obtained a positive effect of defence expenditures on economic growth using a Deger model. In addition, Sezgin (2000) and Dunne et al (2001) used the Granger causality test and concluded that defence expenditures had a negative effect on economic growth.…”

mentioning

confidence: 99%

The Long-Run Linkages Between Education, Health and Defence Expenditures and Economic Growth: Evidence From Turkey

Eryigit

Eryiğit

Selen

2012

In this study, we empirically investigate the long-run relationships between education-health expenditures, defence expenditures and economic growth in Turkey by using annual time-series data for the time period 1950-2005. To estimate these relationships, we use the cointegration method, which allows for the existence of structural breaks. The results show that there are two cointegrating vectors in the system with statistically significant structural breaks. According to the identified long-run equations, education and health expenditures affect economic growth positively, while defence expenditures have negative effects. In addition, the results show that there is a budgetary trade-off between education-health and defence expenditures.