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The Relationship Between Globalization And Military Expenditures In G7 Countries: Evidence From A Panel Data Analysis

Author

Listed:
  • Tsung-pao Wu
  • Dian Fan

    (Department of Business Administration, Nanfang College of Sun Yat-Sen University)

  • Tsangyao Chang

    (Department of Finance, Feng Chia University)

Abstract

This study explores the causal linkages between military expenditure and globalization in G7 countries (i.e. Canada, France, Germany, Italy, Japan, the UK, and the USA) by analyzing data for the period 1988-2011. Panel causality was examined to explain dependency and heterogeneity across countries. The results of one-way Granger causality show that globalization influenced military expenditures in Germany, and Japan. Moreover, there was no evidence that military expenditures caused globalization in any G7 country. The evidence from Italy shows interaction causality between globalization and military expenditure. Bootstrap panel Granger causality tests show that the causality between globalization and military expenditure varies across countries with different conditions. The findings of this study could provide important policy implications for the G7 countries under study.

Suggested Citation

  • Tsung-pao Wu & Dian Fan & Tsangyao Chang, 2016. "The Relationship Between Globalization And Military Expenditures In G7 Countries: Evidence From A Panel Data Analysis," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 50(3), pages 285-302.
    • Handle: RePEc:cys:ecocyb:v:50:y:2016:i:3:p:285-302
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    References listed on IDEAS

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    Cited by:

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    2. Kentor, Jeffrey & Clark, Rob & Jorgenson, Andrew, 2023. "The hidden cost of global economic integration: How foreign investment drives military expenditures," World Development, Elsevier, vol. 161(C).
    3. Sorana Vatavu & Oana-Ramona Lobont & Petru Stefea & Daniel Brindescu-Olariu, 2019. "How Taxes Relate to Potential Welfare Gain and Appreciable Economic Growth," Sustainability, MDPI, vol. 11(15), pages 1-16, July.

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    More about this item

    Keywords

    Military Expenditure; Globalization; Dependency and Heterogeneity; Bootstrap Panel Granger Causality Test; G7 countries.;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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