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Military Spending and Economic Growth in Greece, Portugal and Spain

Author

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  • Paul Dunne

    () (School of Economics, University of the West of England)

  • Eftychia Nikolaidou

    () (City Liberal Studies, Thessaloniki, Greece,)

Abstract

Analysing the relationship between military spending and growth has been an important area of empirical research. Early studies focussed on large cross sections of countries, but criticisms of these led to a focus on case studies of individual countries and studies of groups of relatively homogeneous countries. Granger causality methods have also become common techniques for such analyses, both as single equation analyses and more recently, within a cointegrating VAR framework. This paper does two things. First it provides an empirical analysis of three of the EU’s poorest, peripheral economies, namely Greece, Portugal and Spain. It also considers the range of available Granger causality techniques and compares their results. It finds that the results differ across the methods used, indicating the problems with earlier studies, and across the countries, indicating the problems of drawing inferences across even relatively homogeneous economies.

Suggested Citation

  • Paul Dunne & Eftychia Nikolaidou, 2005. "Military Spending and Economic Growth in Greece, Portugal and Spain," Working Papers 0510, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  • Handle: RePEc:uwe:wpaper:0510
    as

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    File URL: http://carecon.org.uk/DPs/0510.pdf
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    References listed on IDEAS

    as
    1. Gene M. Grossman (ed.), 1996. "Economic Growth," Books, Edward Elgar Publishing, volume 0, number 553.
    2. George M. Georgiou & Panayotis T. Kapopoulos & Sophia Lazaretou, 1996. "Modelling Greek-Turkish Rivalry: An Empirical Investigation of Defence Spending Dynamics," Journal of Peace Research, Peace Research Institute Oslo, vol. 33(2), pages 229-239, May.
    3. J Paul Dunne, Eftychia Nikolaidou, 2005. "Military Spending and Economic Growth in Greece, Portugal and Spain," Frontiers in Finance and Economics, SKEMA Business School, vol. 2(1), pages 1-17, June.
    4. H. Sonmez Atesoglu, 2002. "Defense Spending Promotes Aggregate Output in the United States--Evidence from Cointegration Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(1), pages 55-60.
    5. Peter Batchelor & J. Paul Dunne & David Saal, 2000. "Military spending and economic growth in South Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(4), pages 553-571.
    6. Erdal Karagol & Serap Palaz, 2004. "Does defence expenditure deter economic growth in Turkey? A cointegration analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(3), pages 289-298.
    7. 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.
    8. Faini, Riccardo & Annez, Patricia & Taylor, Lance, 1984. "Defense Spending, Economic Structure, and Growth: Evidence among Countries and Over Time," Economic Development and Cultural Change, University of Chicago Press, vol. 32(3), pages 487-498, April.
    9. Joerding, Wayne, 1986. "Economic growth and defense spending : Granger Causality," Journal of Development Economics, Elsevier, vol. 21(1), pages 35-40, April.
    10. Christos Kollias & Charis Naxakisb & Leonidas Zarangasb, 2004. "Defence Spending and Growth in Cyprus: A Causal Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(3), pages 299-307.
    11. J. Paul Dunne & Ron Smith & Dirk Willenbockel, 2005. "Models Of Military Expenditure And Growth: A Critical Review," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 449-461.
    12. J Paul Dunne & Eftychia Nikolaidou, 2011. "Defence Spending and Economic Growth in the EU15," Working Papers 1102, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    13. Chien-Hsun Chen, 1993. "Causality between Defence Spending and Economic Growth: The Case of Mainland China," Journal of Economic Studies, Emerald Group Publishing, vol. 20(6), pages 37-43, October.
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    Cited by:

    1. Alptekin, Aynur & Levine, Paul, 2012. "Military expenditure and economic growth: A meta-analysis," European Journal of Political Economy, Elsevier, vol. 28(4), pages 636-650.
    2. Shahbaz, Muhammad & Leitão, Nuno Carlos & Uddin, Gazi Salah & Arouri, Mohamed & Teulon, Frédéric, 2013. "Should Portuguese economy invest in defense spending? A revisit," Economic Modelling, Elsevier, vol. 35(C), pages 805-815.
    3. J Paul Dunne, Eftychia Nikolaidou, 2005. "Military Spending and Economic Growth in Greece, Portugal and Spain," Frontiers in Finance and Economics, SKEMA Business School, vol. 2(1), pages 1-17, June.
    4. J Paul Dunne, 2011. "Military Keynesianism: An Assessment," Working Papers 1106, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    5. Paul Dunne & Eftychia Nikolaidou & Andre Roux, 2000. "Defence spending and economic growth in South Africa: A supply and demand model," Defence and Peace Economics, Taylor & Francis Journals, vol. 11(4), pages 573-585.
    6. Eftychia Nikolaidou, 2016. "Greece, Portugal, Spain: New evidence on the economic effects of military expenditure using the new SIPRI data," Economics of Peace and Security Journal, EPS Publishing, vol. 11(2), pages 20-27, October.
    7. Alexamder, W.R. & Hansen, P. Author-Emai, 2004. "A Criritique of the Multi-Sector Model of the Effects of Military Spending on Economic Growth," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(2).
    8. Goodness C. Aye & Mehmet Balcilar & John P. Dunne & Rangan Gupta & Reneé van Eyden, 2014. "Military expenditure, economic growth and structural instability: a case study of South Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(6), pages 619-633, December.
    9. Ömer Özak & Oscar Mauricio Valencia, 2002. "Impacto macroeconómico y distributivo del impuesto de seguridad democrática," ARCHIVOS DE ECONOMÍA 011294, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    10. J. Paul Dunne & Ron Smith & Dirk Willenbockel, 2005. "Models Of Military Expenditure And Growth: A Critical Review," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 449-461.
    11. repec:ipg:wpaper:2014-380 is not listed on IDEAS

    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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