Determining Military Expenditures: Arms Races and Spill-Over Effects in Cross-Section and Panel Data
AbstractThis paper considers the determinants of military spending, building on an emerging literature that estimates military expenditure demand functions in cross-section and panel data, incorporating ‘arms-race’ type effects. It updates Dunne and Perlo-Freeman (2003b) using the SIPRI military expenditure database for the period 1988-2003, finding broadly similar results. It also shows differences in results across panel methods, particularly the within and between estimates and illustrates the importance of recognising and modelling dynamic processes within panel data. Heterogeneity is also found to be an important issue and when countries are broken up into groups on the basis of per capita income there is no obvious systematic pattern in the results. This is seen to imply that the demand for military spending, even between two mutually hostile powers, may depend on the whole nature of the relationship between them (and other countries and events in the region), and not simply Richardsonian action-reaction patterns.
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Bibliographic InfoPaper provided by Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol in its series Working Papers with number 0901.
Length: 24 pages
Date of creation: Jan 2009
Date of revision:
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More information through EDIRC
Military Spending; Demand; Arms races; Spillovers; Panel data;
Other versions of this item:
- J Paul Dunne & Sam Perlo-Freeman & Ron P Smith, 2008. "Determining Military Expenditures: Arms Races and Spill-Over Effects in Cross-Section and Panel Data," Discussion Papers 0801, British University in Egypt, Faulty of Business Administration, Economics and Political Science.
- H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-25 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"The Demand for Military Spending in Egypt,"
1210, Ben-Gurion University of the Negev, Department of Economics.
- Dunne, J. Paul & Smith, Ron P., 2007. "The Econometrics of Military Arms Races," Handbook of Defense Economics, Elsevier.
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- Vincenzo Bove & Georgios Efthyvoulou, 2013.
"Political Cycles in Public Expenditure: Butter vs. Guns,"
2013016, The University of Sheffield, Department of Economics.
- Bove, Vincenzo & Efthyvoulou, Georgios, 2013. "Political Cycles in Public Expenditure: Butter vs Guns," NEPS Working Papers 7/2013, Network of European Peace Scientists.
- Rota, Mauro, 2011. "Military Burden and the Democracy Puzzle," MPRA Paper 35254, University Library of Munich, Germany.
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