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Soft Modeling of Military Expenditure, Income Inequality, and Profit Rate, 1988–2008

Author

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  • Elveren Adem Yavuz

    (Fitchburg State University, Massachusetts, USA)

  • Taşıran Ali Cevat

    (Istanbul Gedik University, Istanbul, Turkey)

Abstract

This paper investigates the nexus of military expenditure, income inequality, and profit rate, applying the non-parametric technique of Partial Least Squares Path Modeling (PLS-PM) to 21 countries for 1988–2008. The findings suggest that military expenditure has a positive effect on income inequality while income inequality has a positive impact on profit rate. In contrast, military expenditure has a (relatively small) positive effect on profit rate. However, these results change significantly once unobserved heterogeneity is considered. Accordingly, based on four segments, although the positive effect of income inequality on profit rate remains the same for each segment, for some segments, the effect of military expenditure on income inequality and profit rate become negative.

Suggested Citation

  • Elveren Adem Yavuz & Taşıran Ali Cevat, 2021. "Soft Modeling of Military Expenditure, Income Inequality, and Profit Rate, 1988–2008," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 27(3), pages 405-430, September.
    • Handle: RePEc:bpj:pepspp:v:27:y:2021:i:3:p:405-430:n:4
    DOI: 10.1515/peps-2020-0013
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    References listed on IDEAS

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    1. Rigdon, Edward E., 2016. "Choosing PLS path modeling as analytical method in European management research: A realist perspective," European Management Journal, Elsevier, vol. 34(6), pages 598-605.
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    More about this item

    Keywords

    military expenditure; income inequality; profit; soft modeling; non-parametric estimation; Partial Least Squares Path Modeling;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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