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Militarization’s effects on fiscal responses to the COVID-19 pandemic: an empirical investigation through a structural equation model

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  • Kyriakos Emmmanouildis

    (University of York Europe Campus)

Abstract

The present study explores the impact of pre-existing militarization levels on fiscal responses to the COVID-19 pandemic using a Structural Equation Model (SEM). Although the existing literature has addressed various determinants of fiscal measures, the relationship between a country's level of militarization and the magnitude of its fiscal responses remains understudied. Employing the Global Militarization Index (GMI) as a comprehensive measure along with military expenditures the paper provides estimates of both direct and indirect effects on fiscal packages. The results from a sample of 144 countries suggest that countries with a significant degree of militarization demonstrated reduced fiscal responsiveness to the challenges posed by the COVID-19 pandemic. According to the analysis, this is mainly due to the negative effects of the defense sector on countries' income, as income appears to be one of the main drivers of the fiscal measures. However, the disaggregation of the latter makes clear that the identified link between the military sector and fiscal intervention is attributed to effects on expenditures other than those devoted to the health sector.

Suggested Citation

  • Kyriakos Emmmanouildis, 2025. "Militarization’s effects on fiscal responses to the COVID-19 pandemic: an empirical investigation through a structural equation model," SN Business & Economics, Springer, vol. 5(7), pages 1-25, July.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:7:d:10.1007_s43546-025-00859-y
    DOI: 10.1007/s43546-025-00859-y
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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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