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Military spending and the black market premium in developing countries

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  • Mohsen Bahmani-Oskooee
  • Gour Goswami

Abstract

Researchers who have been concerned with the economic implications of military spending have mostly concentrated on its impact on economic growth, corruption, real exchange rate and inflation. In this paper we investigate the impact of military spending on black market premium, an area that has not been tackled so far. After adding a measure of military spending to a well established model of black market premium form the literature, we estimate the model by pooling annual data over the 1985 - 1998 period across 61 developing countries. Results from five panel specifications provide considerable evidence that higher military spending leads to higher black market premium.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Gour Goswami, 2006. "Military spending and the black market premium in developing countries," Review of Social Economy, Taylor & Francis Journals, vol. 64(1), pages 77-91.
    • Handle: RePEc:taf:rsocec:v:64:y:2006:i:1:p:77-91
    DOI: 10.1080/00346760500530169
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    References listed on IDEAS

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    Cited by:

    1. Eric S. Lin & Hamid E. Ali, 2009. "Military Spending and Inequality: Panel Granger Causality Test," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(5), pages 671-685, September.
    2. Masato Shizume, 2018. "Black Market Prices during World War II in Japan: An Estimate Using the Hedonic Approach," IMES Discussion Paper Series 18-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
    3. Alper Aslan, 2012. "The Relationship Between Military Spending and Black Market Premium in Greece: An ARDL Approach," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(2), pages 155-161, November.
    4. Mohamed Maher & Yanzhi Zhao, 2022. "Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(8), pages 956-979, November.
    5. John Hudson & Philip Jones, 2008. "Corruption And Military Expenditure: At 'No Cost To The King'," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(6), pages 387-403.

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