The Defense-Growth Nexus: An Application for the Israeli-Arab Conflict
AbstractThis paper revisits the defence-growth nexus for the rivals of the Israeli-Arab conflict over the last four decades. To this end, we utilize the Toda and Yamamoto (1995) causality test and the generalized variance decomposition. Contrary to the conventional wisdom and many earlier studies, we fail to detect any persistent adverse impact of military expenditures on economic growth. Our conclusions are kept intact even when we account for the possibility of endogenous structural breaks and during the post-1979 peace treaty period. Our findings imply insignificant peace dividends once the conflict is resolved and the military spending is cut to internationally acceptable standards.
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Bibliographic InfoPaper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 1003.
Length: 23 pages
Date of creation: 2010
Date of revision:
Publication status: Forthcoming in Defence and Peace Economics
Growth; Middle East; Israeli-Arab conflict; Causality; Generalized Forecast Error Variance Decomposition;
Other versions of this item:
- Abu-Qarn, Aamer, 2010. "The Defense-growth nexus: An application for the Israeli-Arab conflict," MPRA Paper 22275, University Library of Munich, Germany, revised 2010.
- H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-08 (All new papers)
- NEP-ARA-2010-05-08 (MENA - Middle East & North Africa)
- NEP-FDG-2010-05-08 (Financial Development & Growth)
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