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Asymmetric and Threshold Effect of Military Expenditure on Economic Growth: Insight from an Emerging Market

Author

Listed:
  • Dada James Temitope

    (Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria)

  • Sharimakin Akinwumi

    (Department of Economics, Adeyemi College of Education, Ondo, Ondo, Nigeria)

  • Al-Faryan Mamdouh Abdulaziz Saleh

    (Faculty of Business and Law, School of Accounting, Economics and Finance, University of Portsmouth, Portsmouth, Hampshire, UK)

  • Tabash Mosab I.

    (College of Business, Al Ain University, Al Ain, Abu Dhabi, United Arab Emirates)

  • Adeiza Adams

    (Malaysian Graduate School of Entrepreneurship and Business (MGSEB), Universiti Malaysia Kelantan, Bachok, Kelantan, Malaysia)

Abstract

This study aims to investigate the asymmetric effect of military expenditure on economic growth in Nigeria. Furthermore, it determines the threshold level of military expenditure that spurs or hinders economic growth in Nigeria. To achieve the study’s objectives, the nonlinear autoregressive distributed lag (NARDL) and dynamic threshold autoregressive (TAR) techniques are applied as estimation techniques to data from 1981 to 2020. The findings from the study show that (1) positive shocks in military expenditure negatively impact economic growth in the short run, while the effect turns positive in the long run. (2) Negative military expenditure shocks negatively influenced economic growth in Nigeria in both periods. (3) The result from the threshold regression found a threshold value of 0.579 for military expenditure. Based on these findings, policymakers must consider the inherent tendency of asymmetry and nonlinearity in military expenditure when formulating policies related to government spending.

Suggested Citation

  • Dada James Temitope & Sharimakin Akinwumi & Al-Faryan Mamdouh Abdulaziz Saleh & Tabash Mosab I. & Adeiza Adams, 2024. "Asymmetric and Threshold Effect of Military Expenditure on Economic Growth: Insight from an Emerging Market," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 30(4), pages 477-503.
    • Handle: RePEc:bpj:pepspp:v:30:y:2024:i:4:p:477-503:n:1001
    DOI: 10.1515/peps-2023-0067
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    References listed on IDEAS

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    1. Ram, Rati, 1995. "Defense expenditure and economic growth," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 10, pages 251-274, Elsevier.
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    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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