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Does Military Expenditure Determine Fiji'S Exploding Debt Levels?

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  • Paresh Kumar Narayan
  • Seema Narayan

Abstract

Fiji's total debt stands at 65% of GDP. Domestic debt constitutes 55% of GDP. The goal of this paper is to investigate whether military expenditure has contributed to Fiji's exploding debt levels over the period 1970 to 2005. Our empirical analysis, conducted within a cointegration and vector error-correction framework, suggests that, in the long-run, military expenditure has had a statistically significant positive impact on both external debt and domestic debt, while income has had a statistically significant positive impact on domestic debt and a statistically significant negative impact on external debt. We explain the reasons behind this finding and draw some policy implications.

Suggested Citation

  • Paresh Kumar Narayan & Seema Narayan, 2008. "Does Military Expenditure Determine Fiji'S Exploding Debt Levels?," Defence and Peace Economics, Taylor & Francis Journals, vol. 19(1), pages 77-87.
  • Handle: RePEc:taf:defpea:v:19:y:2008:i:1:p:77-87 DOI: 10.1080/10242690701453784
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Muhammad Shahbaz & Muhammad shahbaz Shabbir & Muhammad sabihuddin Butt, 2016. "Does Military Spending Explode External Debt in Pakistan?," Defence and Peace Economics, Taylor & Francis Journals, pages 718-741.
    2. Narayan, Paresh Kumar & Narayan, Seema & Prasad, Arti, 2008. "Understanding the oil price-exchange rate nexus for the Fiji islands," Energy Economics, Elsevier, vol. 30(5), pages 2686-2696, September.
    3. Zhang, Xiaoyan & Chang, Tsangyao & Su, Chi-Wei & Wolde-Rufael, Yemane, 2016. "Revisit causal nexus between military spending and debt: A panel causality test," Economic Modelling, Elsevier, vol. 52(PB), pages 939-944.
    4. repec:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0360-z is not listed on IDEAS
    5. W. Robert J. Alexander, 2013. "The Defence-Debt Nexus: Evidence From The High-Income Members Of Nato," Defence and Peace Economics, Taylor & Francis Journals, pages 133-145.

    More about this item

    Keywords

    Military Expenditure; GDP; Debt; Cointegration; Fiji;

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