Foreign aid fungibility and military spending: The case of North Cyprus |
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| Authors: | Mete Feridun |
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| Institution: | 1. Department of International Business, School of Business, University of Greenwich, London, UK;2. Department of Banking and Finance, Faculty of Business and Economics, Eastern Mediterranean University, Gazi Magosa, Turkey. |
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| Abstract: | The present article examines if the foreign aid to North Cyprus is fungible and if it is in a long-run equilibrium relationship with military spending using the Autoregressive Distributed Lag bounds testing procedure from 1977 to 2007. The results suggest that neither tax revenues nor public expenditures are in a long-run equilibrium relationship with foreign aid. However, strong evidence emerges that defence expenditures are in a long-run equilibrium relationship with foreign aid, and that the latter seem to cause the former. |
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| Keywords: | Fungibility Foreign aid Military spending North Cyprus |
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