The Determinants of Military Expenditure in Asia and Oceania, 1992–2016: A Dynamic Panel Analysis

Hou Dongfang ()
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Hou Dongfang: Department of Economics, School of Economic, Political and Policy Science, University of Texas at Dallas, 800 W. Campbell Rd., Richardson, TX 75080, USA

Peace Economics, Peace Science, and Public Policy, 2018, vol. 24, issue 3, 15

Abstract: Using a dynamic panel approach, this article examines the determinants of military expenditures for 29 Asian and Oceanian countries during 1992–2016. A two-step difference-GMM estimator is applied. Both the impact of Chinese and US military expenditure on sample countries’ military budgets are considered. Results show that sample countries do not respond to Chinese military expenditure; however, these countries respond to US military expenditure. Moreover, lagged military expenditure, GDP, population, and trade openness are important determinants of military spending, while wars and regime type are not.

Keywords: demand for military expenditure; dynamic panel approach; Asia; China (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1515/peps-2018-0004

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