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Defence Spending and Income Inequality in Taiwan

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  • Yemane Wolde-Rufael

Abstract

The rising trend in income inequality has recently attracted a renewed interest in the determinants of this growing trend across many countries. This article adds to the debate by investigating the impact of defence expenditure as a possible determinant of inequality in Taiwan, a country once was considered to be a poster child of an equitable growth, but now income inequality has become one of the Taiwan’s growing challenges. Applying the bounds test approach to cointegration and four long-run estimators for the period from 1976–2011, we found a long-run relationship between the various measures of inequality and defence expenditure where defence expenditure exerts a positive and a statistically significant impact on the worse income inequality in Taiwan. Further application of the lag-augmented causality test procedure also reveals a unidirectional causality running from defence expenditure to income inequality with defence expenditure causing income inequality to rise.

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  • Yemane Wolde-Rufael, 2016. "Defence Spending and Income Inequality in Taiwan," Defence and Peace Economics, Taylor & Francis Journals, vol. 27(6), pages 871-884, November.
    • Handle: RePEc:taf:defpea:v:27:y:2016:i:6:p:871-884
    DOI: 10.1080/10242694.2014.886436
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    2. Caruso Raul & Antonella Biscione, 2022. "Militarization and Income Inequality in European Countries (2000–2017)," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 28(3), pages 267-285, September.
    3. Hinaunye Eita & Mduduzi Biyase & Thomas Udimal & Talent Zwane, 2022. "Does military spending affect inequality in South Africa? A revisit," Economics Working Papers edwrg-03-2022, College of Business and Economics, University of Johannesburg, South Africa, revised 2022.

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