Military expenditure and income distribution in South Korea |
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Authors: | Yemane Wolde-Rufael |
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Institution: | Independent Researcher, London, UK |
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Abstract: | This paper attempts to investigate the long-run and the causal relationship between military expenditure and income distribution in South Korea for the period 1965–2011. Applying the bounds test approach to cointegration, we found a long-run relationship between military expenditure and the Gini coefficient with military expenditure having a positive and a statistically significant impact on income inequality. A 1% rise in military expenditure increased the Gini coefficient by 0.38%. Application of the lag-augmented causality test also reveals a unidirectional causality running from military expenditure to income inequality. The evidence seems to suggest that devoting more resources to the military sector may further worsen income inequality in South Korea. |
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Keywords: | Military spending Income inequality South Korea Bounds test Granger causality Variance decomposition |
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