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Defence partnerships, military expenditure, investment, and economic growth: an analysis in PESCO countries

Dimitris Karamanis

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper employs a panel vector autoregressive (PVAR) approach to investigate the relationship among military expenditure, investment, and economic growth, over the period after the enforcement of the Maastricht treaty (1994–2018) in 25 European countries that participate in the Permanent Structured Cooperation (PESCO). By using the Louvain community detection algorithm on the network links that have been established through defence partnerships in PESCO projects, two different country clusters emerge. Findings suggest that military expenditures can stimulate economic growth but the effects may not be common for all Member States, which might benefit from the involvement in joint defence projects to maximize the effectiveness of their defence spending.

Keywords: defence partnerships; military expenditures; investments; economic growth; PVAR; PESCO (search for similar items in EconPapers)
JEL-codes: C33 H56 O47 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2022-07
New Economics Papers: this item is included in nep-net and nep-ppm
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Working Paper: Defence partnerships, military expenditure, investment, and economic growth: an analysis in PESCO countries (2022) Downloads
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