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The effect of military expenditure on stock market development: panel evidence from system GMM estimates

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  • Sakiru Adebola Solarin
  • Pritish Kumar Sahu

Abstract

This paper examines the impact of military expenditure on stock market development in 36 countries over the period 1989-2010. Within a panel framework, the system GMM estimates is utilised to test the relationship with an array of control variables. We augment the traditional measure of military expenditure-military burden, with a newly constructed comprehensive index - Global Militarisation Index. Overall, the results show that military spending has a negative and significant effect on stock market performance in the selected countries.

Suggested Citation

  • Sakiru Adebola Solarin & Pritish Kumar Sahu, 2015. "The effect of military expenditure on stock market development: panel evidence from system GMM estimates," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(3), pages 271-287, June.
    • Handle: RePEc:taf:defpea:v:26:y:2015:i:3:p:271-287
    DOI: 10.1080/10242694.2014.898384
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    References listed on IDEAS

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    1. Charles Amo Yartey, 2008. "The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different?," IMF Working Papers 2008/032, International Monetary Fund.
    2. S Capasso, 2003. "Stock Market Development and Economic Growth: A matter of informational problems," Centre for Growth and Business Cycle Research Discussion Paper Series 32, Economics, The University of Manchester.
    3. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191.
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    1. Cooray, Arusha & Dutta, Nabamita & Mallick, Sushanta, 2017. "The right to be free: is media freedom good news for women's rights?," Journal of Institutional Economics, Cambridge University Press, vol. 13(2), pages 327-355, June.
    2. Sakiru Solarin, 2016. "Sources of labour productivity: a panel investigation of the role of military expenditure," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 849-865, March.
    3. Ullah, Assad & Zhao, Xinshun & Kamal, Muhammad Abdul & Zheng, JiaJia, 2020. "Modeling the relationship between military spending and stock market development (a) symmetrically in China: An empirical analysis via the NARDL approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 554(C).
    4. Charles Shaaba Saba & Nicholas Ngepah, 2022. "Nexus between telecommunication infrastructures, defence and economic growth: a global evidence," Netnomics, Springer, vol. 22(2), pages 139-177, October.
    5. 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.
    6. Muhammad Azam & Faisal Khan & Khalid Zaman & Amran Md. Rasli, 2016. "Military Expenditures and Unemployment Nexus for Selected South Asian Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 1103-1117, July.

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