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Does military expenditure hinder economic growth? Evidence from Greece and Turkey

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  • Manamperi, Nimantha

Abstract

The relationship between economic growth and military expenditure has been extensively studied but its findings are inconclusive and contradictory. The primary reasons behind such disparities include the linear and nonlinear behavior of military expenditure on economic growth and the analysis of different techniques. This study examines the effect of military expenditure on economic growth in Greece and Turkey, which have higher military expenditure burden among the NATO11NATO – North Atlantic Treaty Organization. countries using a modified Barro model. The autoregressive distributive lag bounds testing (ARDL) for cointegration is used to determine the long run effect. A vector error correction model (VECM) has been used to analyze the short run effect between the variables. The military expenditure displays a significant negative effect on economic growth for Turkey for both short and long run. In contrast, there is no significant military expenditure effect on economic growth for Greece.

Suggested Citation

  • Manamperi, Nimantha, 2016. "Does military expenditure hinder economic growth? Evidence from Greece and Turkey," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1171-1193.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:6:p:1171-1193
    DOI: 10.1016/j.jpolmod.2016.04.003
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    More about this item

    Keywords

    Military expenditure; Economic growth; ARDL bounds test; VECM;
    All these keywords.

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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