Does military spending affect inequality in South Africa? A revisit

Mduduzi Biyase, Joel Eita (), Thomas Bilaliib Udimal and Talent Thebe Zwane

Cogent Economics & Finance, 2024, vol. 12, issue 1, 2421698

Abstract: Previous investigations on the military spending-inequality nexus (in South Africa) were underpinned by the assumption that military spending and inequality behaves in symmetric fashion and employed linear autoregressive distributed lag (ARDL) model in their analysis. This paper extends and improves upon prior studies by investigating the short-run and long-run asymmetric effect of military spending on South Africa’s income inequality. Using annual data from 1980 to 2017 and the asymmetric autoregressive distributed lag (NARDL) model by Shin et al. (2014), our paper revisits the military spending-income inequality nexus. We find evidence to suggest an asymmetric association between military and income inequality—income inequality responds differently to positive and negative shocks of military spending in the long- and short-run. Based on these findings, we conclude that the NARDL model delivers more accurate estimates and provides nuanced insights that the traditional linear ARDL.Our study examines the relationship between military spending and income inequality, revealing an asymmetric dynamic. These findings suggest that the Nonlinear ARDL (NARDL) model offers more precise estimates and deeper insights compared to the conventional linear ARDL approach. The significance of this study is that income inequality reacts differently to increases and decreases in military spending, both in the short and long term.

Date: 2024
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Working Paper: Does military spending affect inequality in South Africa? A revisit (2022)
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DOI: 10.1080/23322039.2024.2421698

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