Modeling the Defense-Growth Nexus in a Post-Conflict Country - A Piecewise Linear Approach

Gerhard Reitschuler and Ludger J. Löning ()
Authors registered in the RePEc Author Service: Josef L. Loening

No 97, Ibero America Institute for Econ. Research (IAI) Discussion Papers from Ibero-America Institute for Economic Research

Abstract: The defense-growth nexus is investigated empirically using longitudinal data for Guatemala and allowing the effect of defense spending on growth to be nonlinear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: a positive and significant externality effect of defense spending prevails for relatively low levels of defense spending and becomes negative, albeit insignificant, for higher levels.

Keywords: Guatemala; defense expenditures; nonlinearity; economic growth; externality effect (search for similar items in EconPapers)
JEL-codes: C22 E13 H56 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2004-02-01
New Economics Papers: this item is included in nep-afr and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:got:iaidps:097

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