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The Relationship between Defense Expenditures and Employment in NATO Member States: Bootstrap Panel Causality Test

Author

Listed:
  • Serife Ozsahin

    (Necmettin Erbakan University, Faculty of Political Sciences, Department of Economics, Konya, Turkey)

  • Gulbahar Ucler

    (Kirsehir Ahi Evran University, Faculty of Economics and Administrative Sciences, Department of Economics, Kirsehir, Turkey)

Abstract

In recent years, global tensions, geopolitical risks, political crises, regional conflicts, and wars have played an important role in the increase of defense expenditures of countries. The economic effects of increased defense spending have become one of the frequently discussed topics. The aim of this study is to examine the causal relationship between defense expenditures and employment rates in 18 NATO member countries. To this end, the relationship between defense expenditures and employment rates were analyzed using the Kónya (2006) Bootstrap Panel Causality Test in the post-Cold War period. According to the findings from the 1991-2018 period, a causality relationship was found in 5 of the 18 countries in the panel from defense expenditures to employment, and in 3 of the 18 countries from employment rates to defense expenditures. Thus, it seems impossible to make a general inference about the causality relationship between defense expenditures and employment in NATO member countries.

Suggested Citation

  • Serife Ozsahin & Gulbahar Ucler, 2021. "The Relationship between Defense Expenditures and Employment in NATO Member States: Bootstrap Panel Causality Test," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 71(1), pages 231-249, June.
    • Handle: RePEc:ist:journl:v:71:y:2021:i:xi:p:231-249
    DOI: 10.26650/ISTJECON2020-0022
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    Keywords

    Defense expenditures; Employment; NATO member countries JEL Classification : G01 ; G21 ; J64;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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