Asymmetric Granger Causality between Military Expenditures and Economic Growth in Top Six Defense Suppliers

Abdulnasser Hatemi-J, Tsangyao Chang, Wen-Yi Chen (), Feng-Li Lin () and Rangan Gupta
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Wen-Yi Chen: Department of Senior Citizen Service Management, College of Health, National Taichung University of Science and Technology, Taichung, TAIWAN
Feng-Li Lin: Department of Accounting, Chaoyang University of Technology, Taichung, TAIWAN

No 201565, Working Papers from University of Pretoria, Department of Economics

Abstract: This study applies asymmetric Granger causality test, proposed by Hatemi-J (2011; 2012) to revisit military expenditures-growth nexus for the world top 6 defense suppliers over 1988-2013. Empirical results indicate that the military expenditure-led hypothesis is supported in China and Japan. However, the growth-led hypothesis is supported in four countries, i.e. France, Russia, Saudi Arabia and US. Except for Saudi Arabia, strong economic growth by no means implies automatic expansion of military expenditures. Defense planning in these two countries is a matter of matching their limited resources to attain the suitable priorities. The more threats they perceived, the more military spends. This evidence provides useful insight into the behavior of other potential defense suppliers.

Keywords: Growth; Military Expenditures; Symmetric and Asymmetric Panel Granger Causality (search for similar items in EconPapers)
JEL-codes: C33 H56 O40 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2015-09
New Economics Papers: this item is included in nep-cis
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Citations: View citations in EconPapers (1)

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