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The Effect of the Size of the Military on Stock Market Performance in the United States and the UK

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  • William R. DiPietro
  • Emmanuel Anoruo
  • Bansi Sawhney

Abstract

This paper uses regression analysis to investigate the relationship between military expenditure and stock market performance for the United States and the United Kingdom. Specifically, the study applies the Bierens‐Guo unit root procedures to ascertain the time series properties of the variables in the study. The standard OLS technique is employed to determine the influence of military expenditure on stock markets for the period 1914 through 2001. The results from the unit root tests indicate that the military expenditure, military personnel, stock market, and energy consumption series are level stationary. The results from the OLS equations suggest that military expenditure has significantly positive effect on stock market performance for the United States and the United Kingdom. The implication of this finding is that high‐income class and people in power are less likely to oppose increases in military spending even though such expenditures are not in the best interest of the society.

Suggested Citation

  • William R. DiPietro & Emmanuel Anoruo & Bansi Sawhney, 2008. "The Effect of the Size of the Military on Stock Market Performance in the United States and the UK," Kyklos, Wiley Blackwell, vol. 61(1), pages 33-44, February.
    • Handle: RePEc:bla:kyklos:v:61:y:2008:i:1:p:33-44
    DOI: 10.1111/j.1467-6435.2008.00391.x
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    Cited by:

    1. Sakiru Solarin, 2016. "Sources of labour productivity: a panel investigation of the role of military expenditure," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 849-865, March.
    2. Ullah, Assad & Zhao, Xinshun & Kamal, Muhammad Abdul & Zheng, JiaJia, 2020. "Modeling the relationship between military spending and stock market development (a) symmetrically in China: An empirical analysis via the NARDL approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 554(C).
    3. Michael A. Akume & Gylych Jelilov & Benedict Akanegbu, 2019. "The Impact of Military Spending on Economic Wellbeing in Nigeria," International Journal of Business, Economics and Management, Conscientia Beam, vol. 6(4), pages 186-200.
    4. Rubin, Ofir D. & Ihle, Rico & Kachel, Yael & Goodwin, Barry K., 2013. "The impact of violent political conflict on commodity prices: The Israeli food market," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150961, Agricultural and Applied Economics Association.

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