DEFENSE EXPENDITURES, FISCAL DEFICIT AND DEBT SERVICING NEXUS: A CASE STUDY OF PAKISTAN

Tariq Hussain, Ahmad Raza Ul Mustafa, Makhdum M.I. and Kaleem Ullah
Additional contact information
Tariq Hussain: Associate Professor, Grand Asian University Sialkot
Ahmad Raza Ul Mustafa: Assistant Professor Shaheed Benazir Bhutto University Nawabshah
Makhdum M.I.: PhD Scholar, BZU Multan
Kaleem Ullah: PhD Scholar, Lincoln University College Malaysia

Bulletin of Business and Economics (BBE), 2022, vol. 11, issue 2, 74-83

Abstract: A number of the countries in the world are breathing under the shadow of hostilities and terror. Many developing countries squander major part of their GDP on defense to sustain their sovereignty. Border clashes with India and Afghanistan, Pakistan has to spend massive budget on defense. Therefore, Pakistan has been facing fiscal deficit every year. Moreover, Pakistan’s external debt servicing creates hurdles to increase per capita GDP. For this empirical finding for the time period from 1981-2019, the Johansen co integration and Granger causality tests are used. The empirical results indicate the existence of co-integration. The estimation shows that the defense expenditures and debt servicing statistically significant and negatively affect the per capita GDP, while fiscal deficit reveal the positive and significant impact on the same. The results confirm the existence of one-way causality between fiscal deficit and debt servicing, while causality runs from fiscal deficit to debt servicing.

Keywords: defense expenditures; fiscal deficit; debt servicing; Pakistan (search for similar items in EconPapers)
JEL-codes: F34 H56 H63 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://bbejournal.com/index.php/BBE/article/view/338/312 (application/pdf)
https://bbejournal.com/index.php/BBE/article/view/338 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:11:y:2022:i:2:p:74-83

Access Statistics for this article

Bulletin of Business and Economics (BBE) is currently edited by Dr. Muhammad Irfan Chani

More articles in Bulletin of Business and Economics (BBE) from Research Foundation for Humanity (RFH) Contact information at EDIRC.
Bibliographic data for series maintained by Dr. Muhammad Irfan Chani ().