Asymmetric and Threshold Effect of Military Expenditure on Economic Growth: Insight from an Emerging Market

James Dada, Sharimakin Akinwumi, Al-Faryan Mamdouh Abdulaziz Saleh, Tabash Mosab I. and Adeiza Adams
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Sharimakin Akinwumi: Department of Economics, Adeyemi College of Education, Ondo, Ondo, Nigeria
Al-Faryan Mamdouh Abdulaziz Saleh: Faculty of Business and Law, School of Accounting, Economics and Finance, University of Portsmouth, Portsmouth, Hampshire, UK
Tabash Mosab I.: College of Business, Al Ain University, Al Ain, Abu Dhabi, United Arab Emirates
Adeiza Adams: Malaysian Graduate School of Entrepreneurship and Business (MGSEB), Universiti Malaysia Kelantan, Bachok, Kelantan, Malaysia

Peace Economics, Peace Science, and Public Policy, 2024, vol. 30, issue 4, 477-503

Abstract: This study aims to investigate the asymmetric effect of military expenditure on economic growth in Nigeria. Furthermore, it determines the threshold level of military expenditure that spurs or hinders economic growth in Nigeria. To achieve the study’s objectives, the nonlinear autoregressive distributed lag (NARDL) and dynamic threshold autoregressive (TAR) techniques are applied as estimation techniques to data from 1981 to 2020. The findings from the study show that (1) positive shocks in military expenditure negatively impact economic growth in the short run, while the effect turns positive in the long run. (2) Negative military expenditure shocks negatively influenced economic growth in Nigeria in both periods. (3) The result from the threshold regression found a threshold value of 0.579 for military expenditure. Based on these findings, policymakers must consider the inherent tendency of asymmetry and nonlinearity in military expenditure when formulating policies related to government spending.

Keywords: military expenditure; economic growth; asymmetric; threshold (search for similar items in EconPapers)
JEL-codes: C32 H56 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/peps-2023-0067

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