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The effect of military expenditure on stock market development: panel evidence from system GMM estimates

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  • Sakiru Adebola Solarin
  • Pritish Kumar Sahu

Abstract

This paper examines the impact of military expenditure on stock market development in 36 countries over the period 1989-2010. Within a panel framework, the system GMM estimates is utilised to test the relationship with an array of control variables. We augment the traditional measure of military expenditure-military burden, with a newly constructed comprehensive index - Global Militarisation Index. Overall, the results show that military spending has a negative and significant effect on stock market performance in the selected countries.

Suggested Citation

  • Sakiru Adebola Solarin & Pritish Kumar Sahu, 2015. "The effect of military expenditure on stock market development: panel evidence from system GMM estimates," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(3), pages 271-287, June.
    • Handle: RePEc:taf:defpea:v:26:y:2015:i:3:p:271-287
    DOI: 10.1080/10242694.2014.898384
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    References listed on IDEAS

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    1. Charles Amo Yartey, 2008. "The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different?," IMF Working Papers 2008/032, International Monetary Fund.
    2. S Capasso, 2003. "Stock Market Development and Economic Growth: A matter of informational problems," Centre for Growth and Business Cycle Research Discussion Paper Series 32, Economics, The University of Manchester.
    3. repec:wbk:wbpubs:13191 is not listed on IDEAS
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    2. Ullah, Assad & Zhao, Xinshun & Kamal, Muhammad Abdul & Zheng, JiaJia, 2020. "Modeling the relationship between military spending and stock market development (a) symmetrically in China: An empirical analysis via the NARDL approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 554(C).
    3. Charles Shaaba Saba & Nicholas Ngepah, 2022. "Nexus between telecommunication infrastructures, defence and economic growth: a global evidence," Netnomics, Springer, vol. 22(2), pages 139-177, October.
    4. Muhammad Azam & Faisal Khan & Khalid Zaman & Amran Md. Rasli, 2016. "Military Expenditures and Unemployment Nexus for Selected South Asian Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 1103-1117, July.
    5. Sakiru Solarin, 2016. "Sources of labour productivity: a panel investigation of the role of military expenditure," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 849-865, March.
    6. Sakiru Adebola Solarin, 2017. "Disaggregated military expenditure and the debt level in Nigeria," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1687-1705, July.

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