Military expenditure, economic growth and structural instability: a case study of South Africa
Goodness C. Aye,
Rangan Gupta and
Renee van Eyden ()
Defence and Peace Economics, 2014, vol. 25, issue 6, 619-633
This paper contributes to the growing literature on the milex-growth nexus, by providing a case study of South Africa and considering the possibility of structural breaks by applying newly developed econometric methods. Using full sample bootstrap Granger non-causality tests, no Granger causal link is found between military expenditure and GDP for 1951-2010, but parameter instability tests show the estimated VARs to be unstable. Using a bootstrap rolling window estimation procedure, however, finds evidence of bidirectional Granger causality in various subsamples. This implies standard Granger non-causality tests, which neither account for structural breaks nor time variation may be invalid.
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Working Paper: Military Expenditure, Economic Growth and Structural Instability: A Case Study of South Africa (2013)
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