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Does Taiwan's Defense Spending Crowd out Education and Social Welfare Expenditures?

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  • Chiung-Ju Huang

    (Department of Public Finance, Feng Chia University, Taiwan)

  • Yuan-Hong Ho

    (Department of Public Finance, Feng Chia University, Taiwan)

Abstract

This study utilizes an asymmetric Granger causality test to investigate the causal effect between defense spending and social welfare and education expenditures in Taiwan over the period 1962-2017. The main findings herein do not support that defense spending crowds out social welfare and education expenditures. On the contrary, a positive defense spending shock causes a positive shock to social welfare expenditures. More specifically, increases in defense spending appear to lead to increases in social welfare expenditures. One of the explanations behind this relationship may be that a rise in Taiwan's defense spending is helpful for both political and economic stability, which in turn promotes economic growth and further escalates social welfare expenditures.

Suggested Citation

  • Chiung-Ju Huang & Yuan-Hong Ho, 2018. "Does Taiwan's Defense Spending Crowd out Education and Social Welfare Expenditures?," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 14(1), pages 67-82, February.
    • Handle: RePEc:jec:journl:v:14:y:2018:i:1:p:67-82
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    References listed on IDEAS

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    More about this item

    Keywords

    asymmetric granger causality test; crowding-out effect; defense spending; education expenditures; social welfare expenditures;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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