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Military spending, economic growth and investment: a disaggregated analysis by income group

Author

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  • Christos Kollias

    (University of Thessaly)

  • Suzanna-Maria Paleologou

    (Aristotle University of Thessaloniki)

Abstract

Employing a panel vector autoregression (PVAR) methodology, the paper addresses the nexus between military expenditures and two key macroeconomic variables, namely growth rates and investment spending using SIPRI’s new consistent time series dataset. Given data constraints, the sample chosen was a compromise between T and N for the empirical tests conducted. It consists of 65 countries and covers the period 1971–2014 that allows for a total of 2730 observations. The PVAR model is estimated for the entire sample as well as three income group sub-samples. Findings reported herein are not uniformed, and noteworthy differences between the three income groups were unearthed by the empirical tests conducted.

Suggested Citation

  • Christos Kollias & Suzanna-Maria Paleologou, 2019. "Military spending, economic growth and investment: a disaggregated analysis by income group," Empirical Economics, Springer, vol. 56(3), pages 935-958, March.
    • Handle: RePEc:spr:empeco:v:56:y:2019:i:3:d:10.1007_s00181-017-1379-2
    DOI: 10.1007/s00181-017-1379-2
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    More about this item

    Keywords

    Defence spending; Panel vector autoregression; Growth;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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