The causal nexus between military spending and unemployment in the G7: a bootstrap panel causality test |
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| Authors: | Ming Zhong D P Tang Yemane Wolde-Rufael |
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| Institution: | 1. Department of Insurance, School of Finance, Shanghai University of Finance and Economics, Shanghai, China;2. Institute of National Development, National Taiwan University, Taipei, Taiwan;3. Independent Researcher, London, UK |
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| Abstract: | We revisit the causal relationship between military spending and unemployment in the G7 countries applying a bootstrap panel causality analysis that accounts for both cross-sectional dependence and for heterogeneity across countries. Using per capita real GDP as a controlled variable, we found a unidirectional causality running from military spending to unemployment for Canada, Japan, and the US, one-way causality running from unemployment to military spending for France and Germany, and bidirectional causality for Italy and the UK. The empirical evidence does not seem to provide consistent results regarding the causal relationship between military spending and unemployment in G7 countries. |
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| Keywords: | Military spending Unemployment Dependency and heterogeneity Panel causality test G7 countries |
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