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Military spending and economic growth: a panel data investigation

Evangelia Desli () and A. Gkoulgkoutsika
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A. Gkoulgkoutsika: Aristotle University of Thessaloniki

Economic Change and Restructuring, 2021, vol. 54, issue 3, No 8, 806 pages

Abstract: Abstract The present study examines the worldwide effect of military spending on economic growth for the period 1960–2017 utilizing the dynamic common correlated effects estimator that accounts for country heterogeneity and cross-sectional dependence, while it provides not only sample-average coefficients but country-specific coefficients as well. Overall, the worldwide effect of military spending on economic growth over the period 1960–2017 appears to be negative, and this originates from the cold war and early post-cold war era and is especially evident for the North Atlantic Treaty Organization countries. For the post-cold war era, a neutral effect (i.e., no statistical significance) is apparent for the majority of countries. At the country-specific level, there are some economies that consistently benefit or suffer from military spending, while the type of the individual impact for most of the countries varies over different time periods, with no clear pattern.

Keywords: Military expenditures; Economic growth; Dynamic common correlated effects estimator; Panel data (search for similar items in EconPapers)
JEL-codes: C33 H56 O11 O50 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10644-020-09267-8

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