Introduction: Symposium on defence economics |
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Authors: | Selami Sezgin Ju¨lide Yildirim |
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Institution: | 1. Department of Public Finance , Pamukkale University , Kinikli, Denizli, Turkey;2. Department of Economics , Gazi University , Ankara, Turkey |
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Abstract: | This study revisits the relationship between defence spending and economic growth via a Keynesian model in Pakistan using the autoregressive distributive lag bounds testing approach to cointegration. Empirical evidence suggests a stable cointegration relationship between defence spending and economic growth. An increase in defence spending reduces the pace of economic growth confirming the validity of Keynesian hypothesis in this case. Current economic growth is positively linked with economic growth of previous periods while a rise in non-military expenditures boosts economic growth. Interest rate is inversely associated with economic growth. Finally, unidirectional causality running from military spending to economic growth is found. |
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Keywords: | Defence spending Economic growth Cointegration Causality Pakistan |
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