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The causal nexus between military spending and unemployment in the G7: a bootstrap panel causality test

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  • Ming Zhong
  • Tsangyao Chang
  • D. P. Tang
  • Yemane Wolde-Rufael

Abstract

We revisit the causal relationship between military spending and unemployment in the G7 countries applying a bootstrap panel causality analysis that accounts for both cross-sectional dependence and for heterogeneity across countries. Using per capita real GDP as a controlled variable, we found a unidirectional causality running from military spending to unemployment for Canada, Japan, and the US, one-way causality running from unemployment to military spending for France and Germany, and bidirectional causality for Italy and the UK. The empirical evidence does not seem to provide consistent results regarding the causal relationship between military spending and unemployment in G7 countries.

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  • Ming Zhong & Tsangyao Chang & D. P. Tang & Yemane Wolde-Rufael, 2015. "The causal nexus between military spending and unemployment in the G7: a bootstrap panel causality test," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(6), pages 609-622, December.
    • Handle: RePEc:taf:defpea:v:26:y:2015:i:6:p:609-622
    DOI: 10.1080/10242694.2014.994835
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    2. Charles Shaaba Saba & Nicholas Ngepah, 2022. "Nexus between defence spending, economic growth and development: evidence from a disaggregated panel data analysis," Economic Change and Restructuring, Springer, vol. 55(1), pages 109-151, February.
    3. Saba Charles Shaaba, 2022. "Defence Spending and Economic Growth in South Africa: Evidence from Cointegration and Co-Feature Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 28(1), pages 51-100, February.
    4. Ming Zhong & Tsangyao Chang & Samrat Goswami & Rangan Gupta & Tien-Wei Lou, 2017. "The nexus between military expenditures and economic growth in the BRICS and the US: an empirical note," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(5), pages 609-620, September.
    5. Khalid Zaman, 2019. "Does higher military spending affect business regulatory and growth specific measures? Evidence from the group of seven (G-7) countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 323-348, April.
    6. Zan Zhang & Ken Hung & Tsangyao Chang, 2017. "P2P Loans and bank loans, the chicken and the egg, what causes what?: further evidence from a bootstrap panel granger causality test," Applied Economics Letters, Taylor & Francis Journals, vol. 24(19), pages 1358-1362, November.
    7. Hanif, Abu & Salah Uddin, Muhammad & Bakirtas, Tahsin & Kader, Sheikh Abdul, 2023. "Military Expenditure and Unemployment Nexus in Bangladesh," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 15(1), pages 157-184, January.
    8. Liming Zhao & Liang Zhao & Bing-Fu Chen, 2017. "The interrelationship between defence spending, public expenditures and economic growth: evidence from China," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(6), pages 703-718, November.
    9. Kollias Christos & Paleologou Suzanna-Maria & Tzeremes Panayiotis, 2020. "Defence Spending and Unemployment in the USA: Disaggregated Analysis by Gender and Age Groups," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 26(2), pages 1-13, May.

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