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Consequential Effects of Defence Expenditure on Economic Growth of Saudi Arabia: 1970-2012

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  • Ageli, Mohammed Moosa
  • Zaidan, Shatha Mousa

Abstract

This study investigates the causality relationship between defence expenditures and Non Oil economic growth in Saudi Arabia over the period 1970-2012. Using Unit root tests, Johansen’s co-integration test and Granger Causality test. In this paper we found the existence of bi-directional causality relationship running from Non Oil-GDP to defence expenditure. The results show that, in Saudi Arabia, the model of defence expenditure is found to hold for Non Oil-GDP.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46590.

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Date of creation: 15 Oct 2012
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Publication status: Published in International Journal of Economics and Finance 2.5(2013): pp. 155-163
Handle: RePEc:pra:mprapa:46590

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Keywords: Defence Expenditure; Economic Growth; Unit Root test; Co-integration test; Granger causality and Error Correction Models (ECM); Saudi Arabia;

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  1. Granger, C. W. J., 1980. "Testing for causality : A personal viewpoint," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 2(1), pages 329-352, May.
  2. 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.
  3. Joshua Aizenman & Reuven Glick, 2003. "Military Expenditure, Threats, and Growth," NBER Working Papers 9618, National Bureau of Economic Research, Inc.
  4. Christos Kollias & Charis Naxakisb & Leonidas Zarangasb, 2004. "Defence Spending and Growth in Cyprus: A Causal Analysis," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 15(3), pages 299-307.
  5. Ferda Halicioglu, 2005. "Defense Spending and economic growth in Turkey: an empirical application of new macroeconomic theory," Macroeconomics, EconWPA 0504011, EconWPA.
  6. Deger, Saadet & Sen, Somnath, 1983. "Military expenditure, spin-off and economic development," Journal of Development Economics, Elsevier, Elsevier, vol. 13(1-2), pages 67-83.
  7. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, Econometric Society, vol. 49(4), pages 1057-72, June.
  8. Thilo Klein, 2004. "Military expenditure and economic growth: peru 1970-1996," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 15(3), pages 275-288.
  9. Brumm, Harold J., 1997. "Military Spending, Government Disarray, and Economic Growth: A Cross-Country Empirical Analysis," Journal of Macroeconomics, Elsevier, Elsevier, vol. 19(4), pages 827-838, October.
  10. H. Sonmez Atesoglu, 2002. "Defense Spending Promotes Aggregate Output in the United States--Evidence from Cointegration Analysis," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(1), pages 55-60.
  11. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, Econometric Society, vol. 55(2), pages 251-76, March.
  12. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, Elsevier, vol. 39(1-2), pages 199-211.
  13. Lipow, Jonathan & Antinori, Camille M., 1995. "External security threats, defense expenditures, and the economic growth of less-developed countries," Journal of Policy Modeling, Elsevier, Elsevier, vol. 17(6), pages 579-595, December.
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