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A dynamic panel analysis using SIPRI’s extended military expenditure data: The case of Middle Power nations

Author

Listed:
  • Mohamed Douch

    (Management and Economics Department, Royal Military College of Canada, Canada)

  • Binyam Solomon

    (Defence Research and Development, Department of National Defence, Canada)

Abstract

This study employs SIPRI’s extended military expenditure dataset to estimate a dynamic panel analysis of Middle Powers’ defense posture. The dynamic approach, particularly the Auto Regressive Distributed Lag (ARDL) approach, permits simultaneous, but separate, assessment of short- and long-run effects of a particular variable on military expenditure. We verify the robustness of earlier findings on Middle Power nations’ defense posture. In particular, their military expenditure tends to an income elasticity of greater than one indicating that military power is, at least in part, a status good. In addition, Middle Powers react to threat variables that proxy global instability, such as nuclear power proliferation, and they use foreign aid as a complementary policy tool. Competing demands for funds lead to significant tradeoffs between military and nonmilitary government spending.

Suggested Citation

  • Mohamed Douch & Binyam Solomon, 2016. "A dynamic panel analysis using SIPRI’s extended military expenditure data: The case of Middle Power nations," Economics of Peace and Security Journal, EPS Publishing, vol. 11(2), pages 45-49, October.
    • Handle: RePEc:epc:journl:v:11:y:2016:i:2:p:45-49
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    References listed on IDEAS

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    1. Patrick Sevestre & Laszlo Matyas, 2008. "The Econometrics of Panel Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00279977, HAL.
    2. László Mátyás & Patrick Sevestre (ed.), 2008. "The Econometrics of Panel Data," Advanced Studies in Theoretical and Applied Econometrics, Springer, number 978-3-540-75892-1.
    3. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, January.
    4. Smith, Ron, 1995. "The demand for military expenditure," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 4, pages 69-87, Elsevier.
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    Cited by:

    1. Charles Shaaba Saba & Nicholas Ngepah & Christian Nsiah, 2020. "Convergence in military expenditure and economic growth in Africa and its regional economic communities: evidence from a club clustering algorithm," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1832344-183, January.
    2. Hardy, Daniel C. L., 2023. "Welfare, Autonomy, and Relative GDP," Department of Economics Working Paper Series 330, WU Vienna University of Economics and Business.
    3. Douch Mohamed & Solomon Binyam, 2018. "Status or Security: The Case of the Middle East and North Africa Region," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 24(3), pages 1-12, September.
    4. Douch, Mohamed & Solomon, Binyam, 2017. "Demand for Military Spending: The case of the MENA Region," MPRA Paper 88689, University Library of Munich, Germany.
    5. Christos Kollias & Suzanna Maria Paleologou & Panayiotis Tzeremes & Nickolaos Tzeremes, 2018. "The demand for military spending in Latin American countries," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 27(1), pages 1-17, December.
    6. Daniel C. L. Hardy, 2023. "Welfare, Autonomy, and Relative GDP," Department of Economics Working Papers wuwp330, Vienna University of Economics and Business, Department of Economics.
    7. Abdul Rehman & Hengyun Ma & Rafael Alvarado & Fayyaz Ahmad, 2023. "The nexus of military, final consumption expenditures, total reserves, and economic development of Pakistan," Economic Change and Restructuring, Springer, vol. 56(3), pages 1753-1776, June.

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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