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Consequential Effects of Defence Expenditure on Economic Growth of Saudi Arabia: 1970-2012

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  • Ageli, Mohammed Moosa
  • Zaidan, Shatha Mousa

Abstract

This study investigates the causality relationship between defence expenditures and Non Oil economic growth in Saudi Arabia over the period 1970-2012. Using Unit root tests, Johansen’s co-integration test and Granger Causality test. In this paper we found the existence of bi-directional causality relationship running from Non Oil-GDP to defence expenditure. The results show that, in Saudi Arabia, the model of defence expenditure is found to hold for Non Oil-GDP.

Suggested Citation

  • Ageli, Mohammed Moosa & Zaidan, Shatha Mousa, 2012. "Consequential Effects of Defence Expenditure on Economic Growth of Saudi Arabia: 1970-2012," MPRA Paper 46590, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:46590
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    File URL: https://mpra.ub.uni-muenchen.de/46590/1/MPRA_paper_46590.pdf
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    References listed on IDEAS

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
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    3. Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2003. "Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 567-583, September.
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    5. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
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    7. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
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    More about this item

    Keywords

    Defence Expenditure; Economic Growth; Unit Root test; Co-integration test; Granger causality and Error Correction Models (ECM); Saudi Arabia;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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