An analytical approach on defense expenditure and economic growth

Kalyoncu, Hüseyin; Yücel, Fatih

doi:10.1108/01443580610706564

Cited by 35 publications

(23 citation statements)

References 50 publications

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“…Therefore, the next step was to carry out Granger-causality tests. It is a technique for searching the direction of causation between variables after the existence of cointegration (Kalyoncu and Yucel, 2006).…”

Section: Government Expenditure and Economic Growthmentioning

confidence: 99%

The Impact of Government Expenditure on Economic Growth in Kenya: 1963-2008

Maingi¹

2017

aeb

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The rapid growth in government expenditure in Kenya has caused concern among policy makers on the implication of such growth. Over the three decades, government expenditure in the country grew at a faster rate than the growth rate of GDP. Given this fiscal scenario, an explanation of this requires studying the impact of government expenditure on economic growth. The specific objectives of the study were to: investigate the relationship between the components of government expenditure and economic growth; examine the effects of components of government expenditure on GDP growth rate; analyze the effects of government expenditure reforms on economic growth; and to draw policy implications from the findings. The data used were government expenditure components that included expenditure on government investment, physical infrastructure, education, health care, public debt servicing, economic affairs, general administration and services, defense, public order and national security, and government consumption. Sources of data were Kenya government documents and international financial statistics publications. The study applied Vector Auto Regression estimation technique using the annual time series data for the period 1963 to 2008 to evaluate the impact of government expenditure on economic growth. The Johansen cointegration tests revealed a long-run relationship between GDP growth rate and the selected components of government expenditure. Further, the Granger-Causality test indicated bi-directional causality between GDP growth rate and components of government expenditure. The results of impulse response functions and variance decomposition revealed that government expenditure on investment, physical infrastructure, education, health care, public debt servicing, economic affairs, general administration and services, defense, public order and national security and government consumption have effect on economic growth. Furthermore, the study established that expenditure reforms of budget rationalization, expenditure downsizing, privatization and governance affect economic growth. The study concludes that the composition of government expenditure and public expenditure reforms matter for economic growth.

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Section: Government Expenditure and Economic Growthmentioning

confidence: 99%

The Impact of Government Expenditure on Economic Growth in Kenya: 1963-2008

Maingi¹

2017

aeb

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“…A number of economists (e.g. Grobar and Porter 1989;Chen 1993;Kollias 1994;Dunne et al 2005;Heo and Eger 2005;Lai et al 2005;Reitschuler and Loening 2005;Kalyoncu and Yucel 2006;Narayan and Singh 2007) investigated the defence-growth relationship. The main controversy in the literature is not only "which comes first, the chicken or the egg?"…”

Section: Literature Overviewmentioning

confidence: 99%

The relationship between budgetary expenditure and economic growth in Poland

Gurgul

Mestel

2011

Cent Eur J Oper Res

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This paper investigates the association between different kinds of budgetary expenditure and economic growth of Poland. The empirical analysis makes use of linear and nonlinear Granger causality tests to evaluate the applicability of Wagner's Law and that of the contrasting Keynesian theory. We employ aggregate and disaggregate data with the sub-categories of most important budgetary expenditure, including health care and social security, education and science, national defence and public security expenditure and government administration expenditure for the period Q1 2000 to Q3 2008. This causality analysis indicates that total relation between budgetary expenditure and economic growth is consistent with Keynesian theory. The results of our computations have important policy implications. In case of Poland the health care expenditure was found to be as important for economic growth as expenditures on education and science. Furthermore, in order to stimulate economic growth, Polish government should consider reallocating some of national defence, public security and government administration expenditure to health care, social security, education and science expenditure.

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“…These findings might stem from military burden in these countries. Kalyoncu and Yucel (2006) using cointegration and casuality test to investigate the relationship between defense and economic growth in Turkey and Greece. The results show that unidirectional causality running from economic growth to defense expenditure in Turkey, but not in Greece.…”

Section: Introductionmentioning

confidence: 99%

The Relation between Government Expenditures and Economic Growth in Thailand

Jiranyakul

2013

SSRN Journal

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Abstract:The notion that more government expenditures can stimulate growth is controversial. The causation between government expenditures and economic growth in Thailand is examined using the Granger causality test. There is no cointegration between government expenditures and economic growth. A unidirectional causality from government expenditures to economic growth exists. However, the causality from economic growth to government expenditures is not observed. Additionally, estimation results from the least square method with lagged variables of economic growth, government expenditures and money supply show the strong positive impact of government spending on economic growth during the period of investigation.JEL Classification: H50; N15; O23

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An analytical approach on defense expenditure and economic growth

Cited by 35 publications

References 50 publications

The Impact of Government Expenditure on Economic Growth in Kenya: 1963-2008

The Impact of Government Expenditure on Economic Growth in Kenya: 1963-2008

The relationship between budgetary expenditure and economic growth in Poland

The Relation between Government Expenditures and Economic Growth in Thailand

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