 Guns for Butter? Empirical Evidence from ChinaYingying Xu, Hsu Ling Chang, Chi Wei Su and Adelina Dumitrescu Defence and Peace Economics, 2018, vol. 29, issue 7, 809-820 Abstract: This study examines the causal nexus between defence spending and education expenditure in China using the bootstrap Granger full-sample causality test and sub-sample rolling window estimation. The full-sample result indicates that there is no causality between defence spending and education expenditure. By adopting a time-varying rolling window approach to revisit the dynamic causal relationships, this article identifies a negative unidirectional causality running from education expenditure to defence spending. The finding suggests that it is the education expenditure crowds out defence spending in China rather than reverse. No causality is demonstrated from defence spending to education expenditure, indicating that an increase in military spending will not crowd out expenditure on education. The results could be partly explained by that the education expenditure in China is below the requirement of corresponding economic growth, urging for more financial budget. Whereas the findings support a negative trade-off between defence and education expenditures, they refute the theory of ‘guns for butter’. Date: 2018 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:defpea:v:29:y:2018:i:7:p:809-820 Ordering information: This journal article can be ordered from DOI: 10.1080/10242694.2017.1293791 Access Statistics for this article Defence and Peace Economics is currently edited by Professor Keith Hartley More articles in Defence and Peace Economics from Taylor & Francis Journals |
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