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Foreign aid fungibility and military spending: The case of North Cyprus

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  • Mete Feridun

Abstract

The present article examines if the foreign aid to North Cyprus is fungible and if it is in a long-run equilibrium relationship with military spending using the Autoregressive Distributed Lag bounds testing procedure from 1977 to 2007. The results suggest that neither tax revenues nor public expenditures are in a long-run equilibrium relationship with foreign aid. However, strong evidence emerges that defence expenditures are in a long-run equilibrium relationship with foreign aid, and that the latter seem to cause the former.

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  • Mete Feridun, 2014. "Foreign aid fungibility and military spending: The case of North Cyprus," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(5), pages 499-508, October.
    • Handle: RePEc:taf:defpea:v:25:y:2014:i:5:p:499-508
    DOI: 10.1080/10242694.2013.763628
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    Cited by:

    1. Martin C. Steinwand, 2015. "Foreign aid and political stability," Conflict Management and Peace Science, Peace Science Society (International), vol. 32(4), pages 395-424, September.
    2. Stijn van Weezel, 2017. "Mostly Harmless? A Subnational Analysis of the Aid-Conflict Nexus," Working Papers 201728, School of Economics, University College Dublin.

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