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Defense Spending and Unemployment. Evidence from Southern European Countries

Author

Listed:
  • Michael Chletsos

    (University of Ioannina, Department of Economics and Laboratory of Applied Economic and Social Policy, Ioannina, Greece, Phone: +302651005924)

  • Stelios Roupakias

    (University of Ioannina, Department of Economics, Ioannina, Greece)

Abstract

This paper applies the ARDL approach to cointegration in order to address the defense unemployment nexus. We use information on Portugal, Italy, Greece and Spain for the period 1960–2015. Our main results suggest that: (i) there is a stable long-run relationship between the variables under consideration for Portugal, Greece and Spain. (ii) Defense spending decreases (increases) unemployment for the case of Portugal and Greece (Spain), (iii) the impact of non-defense spending is weaker than that of defense spending and (iv) Okun’s law is validated for Portugal, Greece and Spain. (v) These results are robust to the use of heterogeneous panel cointegration and causality analysis.

Suggested Citation

  • Michael Chletsos & Stelios Roupakias, 2017. "Defense Spending and Unemployment. Evidence from Southern European Countries," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 23(1), pages 1-36, January.
    • Handle: RePEc:bpj:pepspp:v:23:y:2017:i:1:p:36:n:3
    DOI: 10.1515/peps-2016-0026
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    References listed on IDEAS

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    1. J. Paul Dunne & Ron Smith & Dirk Willenbockel, 2005. "Models Of Military Expenditure And Growth: A Critical Review," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 449-461.
    2. Jenn-Hong Tang & Cheng-Chung Lai & Eric Lin, 2009. "Military Expenditure And Unemployment Rates: Granger Causality Tests Using Global Panel Data," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(4), pages 253-267.
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    Cited by:

    1. Kollias Christos & Tzeremes Panayiotis & Paleologou Suzanna-Maria, 2020. "Defence Spending and Unemployment in the USA: Disaggregated Analysis by Gender and Age Groups," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 26(2), pages 1-13, May.
    2. Chletsos Michael & Roupakias Stelios, 2020. "The effect of military spending on income inequality: evidence from NATO countries," Empirical Economics, Springer, vol. 58(3), pages 1305-1337, March.
    3. Paula Gómez-Trueba Santamaría & Alfredo Arahuetes García & Tomás Curto González, 2021. "A tale of five stories: Defence spending and economic growth in NATO´s countries," PLOS ONE, Public Library of Science, vol. 16(1), pages 1-22, January.

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    More about this item

    Keywords

    Defense spending; Unemployment; ARDL;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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