Nonlinear Effects of Military Spending on Economic Growth in Sub-Saharan Africa

John Dunne and Christine Makanza

No 2019-04, School of Economics Macroeconomic Discussion Paper Series from School of Economics, University of Cape Town

Abstract: While the military spending-growth nexus has been widely researched, most of this work tends to assume a linear relationship between military expenditure and growth. This ignores the possibility that the relationship may be non linear, and the impact of military burden on growth may vary by its size. A few studies have considered such non-linearities, but they have been mainly been country specific case studies. This paper applies models that allow for changing regimes to a balanced panel of Sub Saharan African countries. It finds there to be a differential of military spending on growth for countries with high and low burdens, with military spending positively contributing to growth in the low burden regime, while it deters growth in the high burden regime in the long run.

Date: 2019
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