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The Military Expenditure-External Debt Nexus: New Evidence From A Panel Of Middle Eastern Countries

  • Paresh Kumar Narayan
  • Russell Smyth

This paper examines the impact of military expenditure and income on external debt for a panel of six Middle Eastern countries; namely, Oman, Syria, Yemen, Bahrain, Iran, and Jordan, over the period 1988 to 2002. Using Pedroni's (2004) test for panel cointegration, we find that there is a long-run relationship between external debt, military expenditure and income. The estimated long-run elasticities suggest that an increase in military expenditure contributes to a rise in external debt, while an increase in income helps the Middle Eastern countries to pay off their external debt.

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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 17-07.

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Length: 28 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:mos:moswps:2007-17
Contact details of provider: Postal: Department of Economics, Monash University, Victoria 3800, Australia
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  17. Erdal Karagol & Selami Sezgin, 2004. "DO defence expenditures increase debt rescheduling in Turkey? probit model approach," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(5), pages 471-480.
  18. J. Paul Dunne a,† & Sam Perlo-Freeman ‡ & Aylin Soydan �, 2004. "Military expenditure and debt in South America," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(2), pages 173-187, April.
  19. Chihwa Kao & Min-Hsien Chiang, 1997. "On the Estimation and Inference of a Cointegrated Regression in Panel Data," Econometrics 9703001, EconWPA.
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  21. Christos Kollias & Nikolaos Mylonidis & Suzanna-Maria Paleologou, 2007. "A Panel Data Analysis Of The Nexus Between Defence Spending And Growth In The European Union," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(1), pages 75-85.
  22. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
  23. Paul Dunne & Eftychia Nikolaidou & Dimitrios Vougas, 2001. "Defence spending and economic growth: A causal analysis for Greece and Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 12(1), pages 5-26.
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