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Does Military Expenditure Determine Fiji'S Exploding Debt Levels?

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  • Paresh Kumar Narayan
  • Seema Narayan

Abstract

Fiji's total debt stands at 65% of GDP. Domestic debt constitutes 55% of GDP. The goal of this paper is to investigate whether military expenditure has contributed to Fiji's exploding debt levels over the period 1970 to 2005. Our empirical analysis, conducted within a cointegration and vector error-correction framework, suggests that, in the long-run, military expenditure has had a statistically significant positive impact on both external debt and domestic debt, while income has had a statistically significant positive impact on domestic debt and a statistically significant negative impact on external debt. We explain the reasons behind this finding and draw some policy implications.

Suggested Citation

  • Paresh Kumar Narayan & Seema Narayan, 2008. "Does Military Expenditure Determine Fiji'S Exploding Debt Levels?," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(1), pages 77-87.
    • Handle: RePEc:taf:defpea:v:19:y:2008:i:1:p:77-87
    DOI: 10.1080/10242690701453784
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    References listed on IDEAS

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    13. Paresh Kumar Narayan & Russell Smyth, 2005. "Temporal causality and the dynamics of democracy, emigration and real income in Fiji," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(2), pages 245-261.
    14. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
    15. Narayan, Paresh Kumar & Narayan, Seema, 2005. "Estimating income and price elasticities of imports for Fiji in a cointegration framework," Economic Modelling, Elsevier, vol. 22(3), pages 423-438, May.
    16. Paresh Kumar Narayan & Biman Chand Prasad, 2007. "The long-run impact of coups on Fiji's economy: evidence from a computable general equilibrium model," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(2), pages 149-160.
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    2. Carla Norrlof & William C. Wohlforth, 2019. "Is US grand strategy self-defeating? Deep engagement, military spending and sovereign debt," Conflict Management and Peace Science, Peace Science Society (International), vol. 36(3), pages 227-247, May.
    3. W. Robert J. Alexander, 2013. "The Defence-Debt Nexus: Evidence From The High-Income Members Of Nato," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(2), pages 133-145, April.
    4. Muhammad Shahbaz & Muhammad shahbaz Shabbir & Muhammad sabihuddin Butt, 2016. "Does Military Spending Explode External Debt in Pakistan?," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(5), pages 718-741, September.
    5. Serap BARIŞ, 2018. "Are defence expenditures the reasons of foreign debts in Turkey?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(615), S), pages 205-220, Summer.
    6. Kadir KARAGÖZ, 2018. "Impact of defence expenditures on external debt: An econometric analysis for Turkey and Turkic Republics," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(614), S), pages 183-192, Spring.
    7. Narayan, Paresh Kumar & Narayan, Seema & Prasad, Arti, 2008. "Understanding the oil price-exchange rate nexus for the Fiji islands," Energy Economics, Elsevier, vol. 30(5), pages 2686-2696, September.
    8. Pempetzoglou Maria, 2021. "A Literature Survey on Defense Expenditures – External Debt Nexus," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(1), pages 119-141, February.
    9. Sakiru Adebola Solarin, 2017. "Disaggregated military expenditure and the debt level in Nigeria," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1687-1705, July.

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