Military Spending and Inequality in South Africa: An ARDL Bound Testing Approach to Cointegration

Mduduzi Biyase, Joel Eita (), Thomas Udimal and Talent Zwane
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Thomas Udimal: School of Economics and Management, Southwest Forestry University, China
Talent Zwane: School of Economics, University of Johannesburg, South Africa

Economia Internazionale / International Economics, 2022, vol. 75, issue 2, 241-268

Abstract: There has been an increasing interest in understanding the relationship between inequality and military spending. However, given the multifaceted nature of the relationship between these variables, studies have yielded inconsistent results. While some studies in this field consider military spending to be unfavorable to inequality, some studies have found evidence to suggest that it reduces inequality. In South Africa there is comparatively no empirical work investigating the issue. To achieve this objective, we used time series data from 1980-2017 to investigate this relationship in South Africa and help to shed some light on the empirical puzzle, by using autoregressive distributed lag (ARDL) and bounds test for cointegration method. The empirical result established a significant long-run relationship between military expenditures and income inequality in South Africa. An increase in the military expenditures leads to a reduction in the rate of income inequality. The result, however, showed that an increase in per capita income leads to an increase in the rate of income inequality. Spese militari e disuguaglianze in Sud Africa: un approccio ARDL Bound Testing di cointegrazione Recentemente l’interesse verso lo studio della relazione tra disuguaglianza e spese militari è cresciuto. Tuttavia, data la natura multiforme di questa relazione i risultati di questi studi sono incoerenti. Mentre alcuni di questi ritengono che le spese militari favoriscano le disuguaglianze, secondo altri vi sono evidenze di una riduzione di queste ultime. Relativamente al Sud Africa non ci sono studi empirici che analizzano questo problema. Allo scopo di studiare questa relazione abbiamo usato i dati relativi al periodo 1980-2017 per far luce sul quesito empirico, utilizzando il metodo ARDL. Il risultato empirico ha riscontrato una relazione significativa di lungo periodo tra le spese militari e le disuguaglianze di reddito in Sud Africa. Un aumento nelle spese militari porta ad una riduzione del tasso di disuguaglianza. Tuttavia, è stato riscontrato che un aumento del reddito pro capite porta ad un aumento del tasso di disuguaglianza.

Keywords: Inequality; Military Spending; Error Correction; ARDL Bounds Testing (search for similar items in EconPapers)
JEL-codes: C22 H56 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Military Spending and Inequality in South Africa: An ARDL Bounds Testing Approach to Cointegration (2022)
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