A dynamic panel analysis using SIPRI’s extended military expenditure data: The case of Middle Power nations

Mohamed Douch and Binyam Solomon ()
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Binyam Solomon: Defence Research and Development, Department of National Defence, Canada

Economics of Peace and Security Journal, 2016, vol. 11, issue 2, 45-49

Abstract: This study employs SIPRI’s extended military expenditure dataset to estimate a dynamic panel analysis of Middle Powers’ defense posture. The dynamic approach, particularly the Auto Regressive Distributed Lag (ARDL) approach, permits simultaneous, but separate, assessment of short- and long-run effects of a particular variable on military expenditure. We verify the robustness of earlier findings on Middle Power nations’ defense posture. In particular, their military expenditure tends to an income elasticity of greater than one indicating that military power is, at least in part, a status good. In addition, Middle Powers react to threat variables that proxy global instability, such as nuclear power proliferation, and they use foreign aid as a complementary policy tool. Competing demands for funds lead to significant tradeoffs between military and nonmilitary government spending.

Keywords: Threat; nuclear arsenal; demand for military expenditure; Middle Powers countries; ARDL panel data (search for similar items in EconPapers)
JEL-codes: C23 H56 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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