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Military Spending and Economic Growth Nexus in Sixteen Latin and South American Countries: A Bootstrap Panel Causality Test

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  • Hsien-Hung Kung

    () (Department of Marketing and Distribution Management, Hsing Wu University, Taipei, Taiwan)

  • Jennifer C. H. Min

    () (Department of International Business, Ming Chuan University, No. 250, Sec. 5, Zhongshan N. Rd., Taipei 11103, Taiwan.)

Abstract

This study revisits the causal linkages between military spending and economic growth in sixteen Latin and South American countries (i.e., Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Paraguay, Peru, Uruguay, and Venezuela) by focusing countryspecific analysis for the period 1988-2010. The panel causality analysis that accounts for dependency and heterogeneity across countries supports evidence on the direction of causality is consistent with the neutrality hypothesis for twelve countries and a military spending-growth hypothesis for Belize and Nicaragua. Regarding the direction of growth-military spending nexus, we find one-way Granger causality running from economic growth to military spending for Bolivia and Ecuador.

Suggested Citation

  • Hsien-Hung Kung & Jennifer C. H. Min, 2013. "Military Spending and Economic Growth Nexus in Sixteen Latin and South American Countries: A Bootstrap Panel Causality Test," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 171-185, December.
  • Handle: RePEc:rjr:romjef:v::y:2013:i:4:p:171-185
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    References listed on IDEAS

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    More about this item

    Keywords

    military expenditure; economic growth; dependency and heterogeneity; panel causality test; Latin and South American countries.;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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