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The Impact of Defense Expenditure on Economic Growth

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Author Info

  • Obreja Brasoveanu, Laura

    ()
    (University of Economic Studies, Bucharest, Finance Department)

Abstract

The goal of this paper is to analyze the relationship between defense expenditures and economic growth in Romania, trying to find out the existence, direction and intensity of this connection. The methods which I used are cluster analysis, quintile analysis, regression technique and Granger causality. The results suggest that in Romania there is a negative correlation. A potential cause of the negative effect of defense expenditures on economic growth in Romania is the high proportion of the spending on equipment and other operational spending. Also I have considered the implications of the budgetary restriction – the limited resources might be given priority for other programs.

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File URL: http://www.ipe.ro/rjef/rjef4_10/rjef4_10_11.pdf
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Bibliographic Info

Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

Volume (Year): (2010)
Issue (Month): 4 (December)
Pages: 148-167

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Handle: RePEc:rjr:romjef:v::y:2010:i:4:p:148-167

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Related research

Keywords: fiscal policy; public expenditures; defense expenditures; economic growth; budget constraint;

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References

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  1. Jesús Crespo Guaresma & Gerhard Reitschuler, 2003. ""Guns or Butter?" Revisited: Robustness and Nonlinearity Issues in the Defense-Grotwth Nexus," Vienna Economics Papers 0310, University of Vienna, Department of Economics.
  2. Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2003. "Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 567-583, September.
  3. Niloy Bose & M. Emranul Haque & Denise R. Osborn, 2007. "Public Expenditure And Economic Growth: A Disaggregated Analysis For Developing Countries," Manchester School, University of Manchester, vol. 75(5), pages 533-556, 09.
  4. Joerding, Wayne, 1986. "Economic growth and defense spending : Granger Causality," Journal of Development Economics, Elsevier, vol. 21(1), pages 35-40, April.
  5. Herschel I. Grossman & Juan Mendoza, 2001. "Butter and guns: Complementarity between economic and military competition," Economics of Governance, Springer, vol. 2(1), pages 25-33, 03.
  6. Selami Sezgin & Julide Yildirim, 2002. "The Demand for Turkish Defence Expenditure," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(2), pages 121-128.
  7. Michael Gerace, 2002. "US Military Expenditures and Economic Growth: Some Evidence from Spectral Methods," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(1), pages 1-11.
  8. Laura Obreja Brasoveanu & Iulian Brasoveanu, 2008. "The Correlation between Fiscal Policy and Economic Growth," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 7(7(524)), pages 19-26, July.
  9. Habibullah, M.S. & Law, Siong-Hook & Dayang-Afizzah, A.M., 2008. "Defense spending and economic growth in Asian economies: A panel error-correction approach," MPRA Paper 12105, University Library of Munich, Germany.
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