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Quality & Quantity

, Volume 52, Issue 3, pp 1193–1207 | Cite as

Asymmetric causality between military expenditures and economic growth in top six defense spenders

  • Abdulnasser Hatemi-J
  • Tsangyao Chang
  • Wen-Yi Chen
  • Feng-Li Lin
  • Rangan Gupta
Article
  • 275 Downloads

Abstract

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.

Keywords

Growth Military expenditures Asymmetric panel causality 

JEL Classification

C33 H56 O40 

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Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  • Abdulnasser Hatemi-J
    • 1
  • Tsangyao Chang
    • 2
  • Wen-Yi Chen
    • 3
  • Feng-Li Lin
    • 4
  • Rangan Gupta
    • 5
  1. 1.Department of Economics and FinanceUAE UniversityAl AinUAE
  2. 2.Department of FinanceFeng Chia UniversityTaichungTaiwan
  3. 3.Department of Senior Citizen Service Management, College of HealthNational Taichung University of Science and TechnologyTaichungTaiwan
  4. 4.Department of AccountingChaoyang University of TechnologyTaichungTaiwan
  5. 5.Department of EconomicsUniversity of PretoriaPretoriaSouth Africa

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