The Military Expenditures and Economic Growth Nexus: Panel Bootstrap Granger Causality Evidence from NATO Countries

  • Mehmet Hanefi Topal Kırklareli University, Department of Public Finance (Turkey)
  • Mustafa Unver Kirikkale University, Department of Public Finance (Turkey)
  • Salih Türedi Recep Tayyip Erdogan University, Department of Economics (Turkey)

Abstract

The purpose of this study is to examine the causal linkage between military expenditures and economic growth in 27 North Atlantic Treaty Organization (NATO) member countries. Different periods are studied due to the unavailability of data for the common period for all countries. Both the symmetric and the asymmetric causality between military expenditures and economic growth are investigated under cross-sectional dependence and panel heterogeneity by using the bootstrap panel Granger causality testing approach. The results indicate that there is both symmetric and asymmetric Granger- causality between military expenditures and economic growth, which vary from one country to another. The robust empirical findings support the military expenditures and economic growth nexus in 12 of the 27 NATO member countries. Moreover, the findings show that more empirical evidence between military expenditures and economic growth can be obtained when the asymmetric causality is considered, in addition to the symmetric causality.
Keywords: Defense economics, Military expenditures, Economic growth, Asymmetric bootstrap Granger causality.
JEL: C33, H50, H56, 047.

How to Cite
Topal M.H., Unver M., & Türedi S. (2021). The Military Expenditures and Economic Growth Nexus: Panel Bootstrap Granger Causality Evidence from NATO Countries. Panoeconomicus, Advance online publication, 1-16. doi:10.2298/PAN170914002T
Section
Original scientific paper