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The Long-run Causal Relationship Between Military Expenditure and Economic Growth in China: Revisited

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  • Ourania Dimitraki
  • Faek Menla Ali

Abstract

This paper re-examines the long-run causal relationship between military expenditure and economic growth in China over the period 1952-2010. An empirical econometric analysis based on a Barro-style growth model is conducted. By employing the Bartlett corrected trace test, which provides better approximations of the finite sample distribution to determine the rank of cointegration, the results support the existence of a single long-run equilibrium relationship between the variables. Furthermore, it is confirmed that the cumulated shocks of military expenditure primarily originate from different components of shocks that relate to economic development rather than the other way round.

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  • Ourania Dimitraki & Faek Menla Ali, 2015. "The Long-run Causal Relationship Between Military Expenditure and Economic Growth in China: Revisited," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(3), pages 311-326, June.
    • Handle: RePEc:taf:defpea:v:26:y:2015:i:3:p:311-326
    DOI: 10.1080/10242694.2013.810024
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    3. Ullah, Assad & Zhao, Xinshun & Kamal, Muhammad Abdul & Zheng, JiaJia, 2020. "Modeling the relationship between military spending and stock market development (a) symmetrically in China: An empirical analysis via the NARDL approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 554(C).
    4. Abdulnasser Hatemi-J & Tsangyao Chang & Wen-Yi Chen & Feng-Li Lin & Rangan Gupta, 2015. "Asymmetric Granger Causality between Military Expenditures and Economic Growth in Top Six Defense Suppliers," Working Papers 201565, University of Pretoria, Department of Economics.
    5. Kyriakos Emmanouilidis & Christos Karpetis, 2020. "The Defense–Growth Nexus: A Review of Time Series Methods and Empirical Results," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(1), pages 86-104, January.
    6. King, Cheng & Du, Jane, 2018. "China’s first priority in post-war state building: A wealthy state, or a strong army?," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 851-872.
    7. Chiwei Su & Yingying Xu & Hsu Ling Chang & Oana-Ramona Lobont & Zhixin Liu, 2020. "Dynamic Causalities between Defense Expenditure and Economic Growth in China: Evidence from Rolling Granger Causality Test," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(5), pages 565-582, July.
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    9. Waqar Qureshi & Noor Pio Khan, 2017. "Revisiting the Relationship between Military Expenditure and Economic Growth in Pakistan," Global Social Sciences Review, Humanity Only, vol. 2(1), pages 18-46, June.
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