TY - JOUR
T1 - Asymmetric causality between military expenditures and economic growth in top six defense spenders
AU - Hatemi-J, Abdulnasser
AU - Chang, Tsangyao
AU - Chen, Wen Yi
AU - Lin, Feng Li
AU - Gupta, Rangan
N1 - Publisher Copyright:
© 2017, Springer Science+Business Media Dordrecht.
PY - 2018/5/1
Y1 - 2018/5/1
N2 - This study applies asymmetric causality tests, proposed by Hatemi-J (Asymmetric panel causality tests with an application to the impact of fiscal policy on economic performance in Scandinavia, 2011; Empir Econ 43(1):447–456, 2012), to revisit military expenditures-growth nexus for the world top six defense spenders during the period of 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 countries is a matter of matching their limited resources to attain the suitable priorities. The more threats they perceive, the more spend for defense. This evidence provides useful insight into the behavior of other potential defense suppliers.
AB - This study applies asymmetric causality tests, proposed by Hatemi-J (Asymmetric panel causality tests with an application to the impact of fiscal policy on economic performance in Scandinavia, 2011; Empir Econ 43(1):447–456, 2012), to revisit military expenditures-growth nexus for the world top six defense spenders during the period of 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 countries is a matter of matching their limited resources to attain the suitable priorities. The more threats they perceive, the more spend for defense. This evidence provides useful insight into the behavior of other potential defense suppliers.
KW - Asymmetric panel causality
KW - Growth
KW - Military expenditures
UR - http://www.scopus.com/inward/record.url?scp=85018337328&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85018337328&partnerID=8YFLogxK
U2 - 10.1007/s11135-017-0512-9
DO - 10.1007/s11135-017-0512-9
M3 - Article
AN - SCOPUS:85018337328
SN - 0033-5177
VL - 52
SP - 1193
EP - 1207
JO - Quality and Quantity
JF - Quality and Quantity
IS - 3
ER -