Militarization’s effects on fiscal responses to the COVID-19 pandemic: an empirical investigation through a structural equation model

Kyriakos Emmmanouildis ()
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Kyriakos Emmmanouildis: University of York Europe Campus

SN Business & Economics, 2025, vol. 5, issue 7, 1-25

Abstract: Abstract The present study explores the impact of pre-existing militarization levels on fiscal responses to the COVID-19 pandemic using a Structural Equation Model (SEM). Although the existing literature has addressed various determinants of fiscal measures, the relationship between a country's level of militarization and the magnitude of its fiscal responses remains understudied. Employing the Global Militarization Index (GMI) as a comprehensive measure along with military expenditures the paper provides estimates of both direct and indirect effects on fiscal packages. The results from a sample of 144 countries suggest that countries with a significant degree of militarization demonstrated reduced fiscal responsiveness to the challenges posed by the COVID-19 pandemic. According to the analysis, this is mainly due to the negative effects of the defense sector on countries' income, as income appears to be one of the main drivers of the fiscal measures. However, the disaggregation of the latter makes clear that the identified link between the military sector and fiscal intervention is attributed to effects on expenditures other than those devoted to the health sector.

Keywords: Fiscal Policy; COVID-19; Militarization; SEM (search for similar items in EconPapers)
JEL-codes: C31 E62 H51 H56 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00859-y

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