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Military Expenditure and Income Inequality in Transition Economies: Fiscal Priorities and Structural Heterogeneity, 1990-2024

Author

Listed:
  • Raul Caruso

    (International Peace Science Center (IPSC), Department of Economic Policy, Università Cattolica del Sacro Cuore, CESPIC, Catholic University “Our Lady of Good Counsel”)

  • Antonella Biscione

    (Department of Economics, University of Foggia, CESPIC, Catholic University “Our Lady of Good Counsel”)

  • Stéphane Mussard

    (CHROME, University of Nîmes AIRESS, University Mohammed 6 Polytechnic)

Abstract

This paper examines the association between military expenditure and disposable-income inequality in a panel of transition economies over the period 1990–2024. The analysis distinguishes three metrics of military expenditure: (i) military spending per capita, (ii) military spending as a share of GDP; and (iii) military spending as a share of total government expenditure. Pooled fractional-response estimates show that the positive association with inequality is concentrated in the share of government expenditure devoted to the military. A Mundlak correlated random-effects decomposition highlights that the association is driven by persistent between-country differences rather than by within-country changes over time. The OLS and Gini-regression robustness checks support the same interpretation. Panel Granger non-causality tests indicate bidirectional predictive precedence between military budget share and inequality. Finally, the regression-tree analysis shows that this relationship is embedded in wider fiscal, institutional, macroeconomic, demographic configurations. Overall, the evidence suggests that military spending matters for inequality mainly as a component of persistent fiscal and structural country profiles.

Suggested Citation

  • Raul Caruso & Antonella Biscione & Stéphane Mussard, 2026. "Military Expenditure and Income Inequality in Transition Economies: Fiscal Priorities and Structural Heterogeneity, 1990-2024," Working Papers 1029, European Centre of Peace Science, Integration and Cooperation (CESPIC), Catholic University 'Our Lady of Good Counsel'.
    • Handle: RePEc:pea:wpaper:1029
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