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Military expenditure and economic growth across different groups: A dynamic panel Granger-causality approach

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  • Chang, Hsin-Chen
  • Huang, Bwo-Nung
  • Yang, Chin Wei
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    Abstract

    Applying GMM (Arellano and Bond, 1991) to panel data of 90 countries spanning over 1992–2006, this paper explores possible relationships between military expenditure and economic growth. Based on the definitions of income levels by the World Bank – high, middle and low – our results indicate military spending leads negatively economic growth for the panels of low income countries with a marginally significance level of 10%. Of four different regional panels (Africa, Europe, the Middle East–South Asia and Pacific Rim), a negative but stronger (5% significance level) causal relationship from military expenditure to economic growth is found for the Europe and Middle East–South Asia regions.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0264999311001337
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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 28 (2011)
    Issue (Month): 6 ()
    Pages: 2416-2423

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    Handle: RePEc:eee:ecmode:v:28:y:2011:i:6:p:2416-2423

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    Web page: http://www.elsevier.com/locate/inca/30411

    Related research

    Keywords: Military expenditure; Economic growth; Dynamic panel data; GMM;

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    Cited by:
    1. Hsien-Hung Kung & Jennifer C. H. Min, 2013. "Military Spending and Economic Growth Nexus in Sixteen Latin and South American Countries: A Bootstrap Panel Causality Test," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 171-185, December.
    2. Christian Grabas & Alexander Nützenadel, 2013. "Industrial Policies in Europe in Historical Perspective," WWWforEurope Working Papers series 15, WWWforEurope.
    3. Chen, Pei-Fen & Lee, Chien-Chiang & Chiu, Yi-Bin, 2014. "The nexus between defense expenditure and economic growth: New global evidence," Economic Modelling, Elsevier, vol. 36(C), pages 474-483.
    4. Wang, Tung-Pao & Shyu, Stacy Huey-Pyng & Chou, Han-Chung, 2012. "The impact of defense expenditure on economic productivity in OECD countries," Economic Modelling, Elsevier, vol. 29(6), pages 2104-2114.

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