Military spending as another cause of the failure of the PPP
AbstractIn a recent article, with a strong theoretical argument but poor empirical support, military spending was identified to be a determinant of real exchange rate or a factor causing the PPP to deviate from equilibrium exchange rate. The poor empirical results were mostly due to a small number of observations (21 cross-sectional). This article employs pooled data from across 37 developing countries over the 1985-1998 period and provides very strong empirical support for the notion that indeed increased military spending could cause the PPP to deviate from equilibrium exchange rate.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 12 (2005)
Issue (Month): 11 ()
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- International Monetary Fund, 2000.
"Corruption and Military Spending,"
IMF Working Papers
00/23, International Monetary Fund.
- Bahmani-Oskooee, Mohsen & Nasir, Abm, 2002. "Corruption, Law and Order, Bureaucracy and Real Exchange RATE," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 1021-28, July.
- Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
- Lin, Eric S. & Ali, Hamid E., 2009. "Military Spending and Inequality: Panel Granger Causality Test," MPRA Paper 40159, University Library of Munich, Germany.
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