Foreign aid fungibility and military spending: the case of North Cyprus

Mete Feridun

No 9549, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: The present article examines if the foreign aid to North Cyprus is fungible and if it is in a long-run equilibrium relationship with military spending using the Autoregressive Distributed Lag bounds testing procedure from 1977 to 2007. The results suggest that neither tax revenues nor public expenditures are in a long-run equilibrium relationship with foreign aid. However, strong evidence emerges that defence expenditures are in a long-run equilibrium relationship with foreign aid, and that the latter seem to cause the former.

Keywords: fungibility; foreign aid; military spending; North Cyprus (search for similar items in EconPapers)
Date: 2014-09-03
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Citations: View citations in EconPapers (2)

Published in Defence and Peace Economics 5.25(2014): pp. 499-508

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