Military Spending and Economic Growth: The Case of Iran

Mohammad Reza Farzanegan ()

No 201223, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Over the last decade, the Iranian government budget on military has been higher than the average of the world. The current increasing international sanctions aim to reduce the military capabilities and capacities of the Iranian government. We analyze the response of the Iranian economy to shocks in its military budget from 1959-2007, using Impulse Response Functions (IRF) and Variance Decomposition Analysis (VDA). The Granger causality results show that there is unidirectional causality from the military spending growth rate to the economic growth rate. The response of income growth to increasing shocks in the military budget is positive and statistically significant.

Keywords: dMilitary spending; Economic growth; VAR model; Impulse Response; Sanctions; Iran (search for similar items in EconPapers)
JEL-codes: C22 H H50 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2012
New Economics Papers: this item is included in nep-ara and nep-fdg
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Military Spending and Economic Growth: The Case of Iran (2014)
Working Paper: Military spending and economic growth: the case of Iran (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201223

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