Military Expenditure and Economic Growth in Less Developed Countries: A Simulta¬neous Equation Approach with an Appli¬cation to Greece, 1958-90

Nicholas Antonakis
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Nicholas Antonakis: University of Athens, Ministry of Industry Energy and Technology, Postal: Athens, Greece,, http://www.ypan.gr/index_uk_c_cms.htm

Economia Internazionale / International Economics, 1996, vol. 49, issue 3, 329-346

Abstract: Earlier empirical studies on the growth effects of military expenditure in LDCs have reported statistical results of limited reliability and were led to confusing conclusions, basically for reasons generated by the use of single-equation models in cross-country analysis. Their findings, therefore, cannot provide full insights into the nature and impacts of defence in individual LDCs. This paper uses three-equation simultaneous model to examine the multiple conduits through .which military expenditure affects the output growth rate as well as the other intermediate effects and feedbacks between military expenditure, savings and growth individual LDCs. The estimation of the model for the Greek economy over the period 1958-90 reveals that the combined effect of military expenditure on economic growth is negative, though less significant than earlier specifications based on le-equation models would suggest.

Date: 1996
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