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Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria

  • Abu-Bader, Suleiman
  • Abu-Qarn, Aamer

This study uses multivariate cointegration and variance decomposition techniques to investigate the causal relationship between government expenditures and economic growth for Egypt, Israel and Syria, for the past three decades. When testing for causality within a bivariate system of total government spending and economic growth, we find bi-directional causality from government spending to economic growth with a negative long-term relationship between the two variables. However, when testing for causality within a trivariate system ¬– the share of government civilian expenditures in GDP, military burden and economic growth – we find that the military burden negatively affects economic growth for all the countries, and that civilian government expenditures cause positive economic growth in Israel and Egypt.

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File URL: https://mpra.ub.uni-muenchen.de/1115/1/MPRA_paper_1115.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1115.

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Date of creation: 2003
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Publication status: Published in Journal of Policy Modeling 6-7.23(2003): pp. 567-583
Handle: RePEc:pra:mprapa:1115
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  19. Bharat Kolluri & Michael Panik & Mahmoud Wahab, 2000. "Government expenditure and economic growth: evidence from G7 countries," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 1059-1068.
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