Analysis of the Economic Effects of Defence Spending in Spain: A Re-Examination Through Dynamic ARDL Simulations and Kernel-Based Regularized Least Squares

Ourania Dimitraki and Kyriakos Emmanouilidis

Defence and Peace Economics, 2024, vol. 35, issue 7, 908-930

Abstract: Spain’s economic growth over the last few decades constitutes a rather distinctive case in post-World War II Europe, which has attracted international academic interest. This paper examines the relationship between Spain’s military expenditure and economic growth during the period 1954-2021 to shed further light. Using the recently developed method of Dynamic Autoregressive Distributive Lag (DARDL) simulation proposed by Jordan and Philips (2018) and the Kernel-Based Regularized Least Squares (KRLS) technique which accounts for potential non-linearities, interactions, and heterogeneous effects, this paper tests the short and long – run equilibrium relationship between military expenditure and economic growth in Spain. Furthermore, with the cumulative sum (CUSUM) and cumulative sum of squares (CUSUMSQ) tests, we examine the stability of the above relationship. The results show that there is a positive short and long – run relationship between military expenditure and economic growth in Spain during the period under study. However, when we stratify our sample (before and after Spain’s democratization), the positive relationship is sustained only during the years of the non – democratic regime. This has further policy implications as policymakers in Spain need to carefully balance national security concerns with the need for sustained economic growth.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10242694.2023.2245698 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:defpea:v:35:y:2024:i:7:p:908-930

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GDPE20

DOI: 10.1080/10242694.2023.2245698

Access Statistics for this article

Defence and Peace Economics is currently edited by Professor Keith Hartley

More articles in Defence and Peace Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().