Panel Causality Analysis Between Defence Expenditure and Economic Growth in Developed Countries


Yilgor M., Karagol E. T. , Saygili C. A.

Defence and Peace Economics, cilt.25, ss.193-203, 2014 (SCI Expanded İndekslerine Giren Dergi) identifier

  • Cilt numarası: 25 Konu: 2
  • Basım Tarihi: 2014
  • Doi Numarası: 10.1080/10242694.2012.724879
  • Dergi Adı: Defence and Peace Economics
  • Sayfa Sayıları: ss.193-203

Özet

There is much controversy in the literature over whether military expenditures have a positive, negative or no relation impact on economic growth. The aim of this paper is to determine the relationship between GDP and defence expenditure. The study analyses GDP and defence expenditures of the developed countries with cross-sectional ADF and SURADF unit root tests using annual data for the years 1980-2007. We conclude that in the long term, according to the Pedroni cointegration test, there exists a relationship between defence expenditure and economic growth. Furthermore, by utilizing the Granger causality test, we find that defence expenditure is a factor in economic growth. In other words, our study validates the hypothesis that defence spending by economically developed countries positively contributes to their economics.