Revisit causal nexus between military spending and debt: A panel causality test

Xiaoyan Zhang, Tsangyao Chang, Chi-Wei Su and Yemane Wolde-Rufael

Economic Modelling, 2016, vol. 52, issue PB, 939-944

Abstract: This study revisits the causal relationship between military spending and debt burden in 11 OECD countries via a panel causality analysis that accounts for both cross-sectional dependence and heterogeneity across countries. Our empirical results indicate unidirectional causality from military spending to debt burden for Japan, Portugal, and the US; one-way causality from debt burden to military spending for both Canada and the UK; bidirectional causality for Spain; and for the rest of countries, we do not find any relationship between military spending and debt burden. The empirical evidence does not provide consistent results regarding the causal relationship between military spending and debt burden in these 11 OECD countries.

Keywords: Military spending; Debt; Dependency and heterogeneity; Panel causality test; OECD countries (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:52:y:2016:i:pb:p:939-944

DOI: 10.1016/j.econmod.2015.10.032

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