The Effects of Military and Health Expenditures as Public Goods and Services on Distribution of Income: An Analysis on Selected European Union Countries

Distribution and redistribution policies in the public economics are important devices used to prevent inequality in income distribution in that specific country. As it is well known, the economic growth of countries does not mean the whole thing by itself. In addition to economic growth, ensuring equality in income distribution, which is an indicator of how national income is distributed among households, is also an important macroeconomic indicator. In this context, in this study, the long-term and causality relationship between military and health expenditures with income distribution for the period 2001-2018 of 13 selected European Union member countries has been tried to be examined. In the two-way causality analyzes using the Bootstrap panel Granger causality methodology, it is striking that there is a direct interaction from all three variables to each other for the most of the sample countries. According to the main findings of the study, it has been determined that serious policy differences persist due to the lack of sufficient common implementation or harmonization in fiscal policy, contrary to the monetary policy in EU countries. In particular, some countries try to maintain public services with almost a concession from income distribution, however; the fact that the situation is completely ‘vice versa’ for some countries, is other remarkable result of the study. Again, in the conclusion part of the study, besides the general evaluation, some basic problem-solving suggestions are also presented to help the policy makers to improve the distribution of income in the future.