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Structural Breaks In Military Expenditures: Evidence For Egypt, Israel,Jordan And Syria

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  • Aamer S. Abu-Qarn

    ()
    (Dept. of Economics, Ben-Gurion University of the Negev, Israel)

  • Suleiman Abu-Bader

    ()
    (Dept. of Economics, Ben-Gurion University of the Negev, Israel)

Abstract

This paper endogenously determines the timing of structural breaks in military expenditures and military burdens for the major parties involved in the Israeli-Arab conflict, namely Egypt, Israel, Jordan, and Syria over the period 1960-2004. Utilizing a test proposed by Vogelsang (1997), we find that all these countries experienced structural breaks, though at different periods in the late 70s and during the 80s. These structural breaks mark a sharp decline in the military burden that can be attributed to the peace talks that were initiated shortly after the 1973 war. When applying the Bai and Perron (1998, 2003) multiple structural break tests we detect two structural breaks for every country. The first break occurred during the 60s and demonstrated a significant rise in the military burden prior to the 1973 war, whereas the second break occurred in the late 70s and during the 80s and was characterized by a sharp decline in the military burden following the instigation of peace negotiations.

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Bibliographic Info

Paper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 0704.

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Length: 28 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:bgu:wpaper:0704

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Keywords: Military Expenditures; Military Burden; Middle-East; Israeli-Arab Conflict; Structural Breaks.;

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  1. Perron, P. & Bai, J., 1995. "Estimating and Testing Linear Models with Multiple Structural Changes," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 9552, Universite de Montreal, Departement de sciences economiques.
  2. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 20(1), pages 25-44, January.
  3. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, Econometric Society, vol. 57(6), pages 1361-1401, November.
  4. Clemente, Jesus & Montanes, Antonio & Reyes, Marcelo, 1998. "Testing for a unit root in variables with a double change in the mean," Economics Letters, Elsevier, vol. 59(2), pages 175-182, May.
  5. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
  6. Dakurah, A. Henry & Davies, Stephen P. & Sampath, Rajan K., 2001. "Defense spending and economic growth in developing countries: A causality analysis," Journal of Policy Modeling, Elsevier, Elsevier, vol. 23(6), pages 651-658, August.
  7. Suleiman Abu-Bader & Aamer Abu-Qarn, 2003. "Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria," Working Papers, Ben-Gurion University of the Negev, Department of Economics 163, Ben-Gurion University of the Negev, Department of Economics.
  8. Zeileis, Achim & Kleiber, Christian & Kramer, Walter & Hornik, Kurt, 2003. "Testing and dating of structural changes in practice," Computational Statistics & Data Analysis, Elsevier, vol. 44(1-2), pages 109-123, October.
  9. Benoit, Emile, 1978. "Growth and Defense in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 26(2), pages 271-80, January.
  10. Vogelsang, Timothy J., 1997. "Wald-Type Tests for Detecting Breaks in the Trend Function of a Dynamic Time Series," Econometric Theory, Cambridge University Press, vol. 13(06), pages 818-848, December.
  11. McGuire, Martin C, 1987. "Foreign Assistance, Investment, and Defense: A Methodological Study with an Application to Israel, 1960-1979," Economic Development and Cultural Change, University of Chicago Press, vol. 35(4), pages 847-73, July.
  12. Lim, David, 1983. "Another Look at Growth and Defense in Less Developed Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 31(2), pages 377-84, January.
  13. Julide Yildirim & Selami Sezgin & Nadir Ocal, 2005. "Military Expenditure And Economic Growth In Middle Eastern Countries: A Dynamic Panel Data Analysis," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 16(4), pages 283-295.
  14. repec:cup:etheor:v:13:y:1997:i:6:p:818-49 is not listed on IDEAS
  15. Jomana Amara, 2008. "Nato Defense Expenditures: Common Goals Or Diverging Interests? A Structural Analysis," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(6), pages 449-469.
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Cited by:
  1. Ucal, Meltem & Karabulut, Gokhan & Bilgin, Mehmet Huseyin, 2009. "Military Expenditures and Inequality: Empirical Evidence from Israel," MPRA Paper 48643, University Library of Munich, Germany.
  2. Cem Saatçioðlu & Levent Korap, 2007. "Turkish Money Demand, Revisited: Some Implications For Inflation And Currency Substitution Under Structural Breaks," Bogazici Journal of Economics and Administrative Sciences, Bogazici University, Department of Economics, Bogazici University, Department of Economics, vol. 21(1+2), pages 107-124.
  3. Aamer S. Abu-Qarn & Suleiman Abu-Bader, 2008. "On The Dynamics Of The Israeli-Arab Arms Race," Working Papers, Ben-Gurion University of the Negev, Department of Economics 0809, Ben-Gurion University of the Negev, Department of Economics.

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