Sovereign debt,deficits and defence spending: the case of Greece

Abstract

The outbreak of the sovereign debt crisis at the end of 2009 in Greece led to a severe recession, and constant economic problems. This paper investigates military expenditure among others as a potential factor to the growth of sovereign debt in Greece over the period 1960 until currently. Our empirical findings suggest that high deficits, inflation and military spending have been the primary causes of debt growth in Greece. The structural break models reveal a much higher effect of deficits and inflation in the post-1990 period while the threshold switching regression, based on the level of sovereign debt, indicate that for levels of debt-to-GDP ratio above 90% deficits, inflation and military expenditures had significantly more pronounced effects on government debt changes.     

The causal nexus between military spending and unemployment in the G7: a bootstrap panel causality test

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.     

Military expenditure and unemployment in the OECD

The effect of military expenditure on employment is a matter of considerable importance. However, few of the standard economic analyses of unemployment take any explicit account of variations in military expenditure in their models. The purpose of this paper is to assess whether the prevalent neglect of this variable in labour economics is justified.

The paper briefly surveys previous estimates made of the employment effects of military expenditure. It then considers evidence from the simple dynamic reduced form regressions estimated on long historical series for the US and the UK and pooled post‐war data for 11 OECD countries. It does not suggest that the share of military expenditure is a significant influence on the unemployment rate. This implies that in analysing unemployment no special account need be taken of military expenditure and that the fear that reductions in the share of military expenditure will be associated with higher average unemployment levels is misplaced.     

An informal framework to aid the analysis and design of military posture

The design of military posture is an exercise in confronting potential enemies’ capabilities within the context of geographic, technological, temporal, political and economic constraints. No formal model is capable of encapsulating the essentials of so complex an environment for closed or simulated analysis, but it is useful to have an informal framework within which to reason interactively within these dimensions.

This paper presents such a scaffolding, patterned on the notion of a military posture as the output of an economic process whose structure reflects important determinants of the characteristics and extents of weaponry and expenditures that are appropriate to the environment within the feasibility set determined by the constraints. The analysis remains at an abstract level, but it does highlight the important shifts toward preparation for littoral warfare, greater reliance on reserve rather than active forces, and necessary changes in missions among military departments.     

From Civil War Victor to Cold War Guard: Positional Warfare in Korea and the Transformation of the Chinese People’s Liberation Army, 1951–1953

This article analyses the impact of the Korean War on the Chinese People’s Liberation Army (PLA), particularly the period of positional warfare from 1951 to 1953. In the war of movement between October 1950 and June 1951, the PLA relied on its civil war era weapons and experience, including the doctrine of ‘battle of annihilation’. Operations in early 1951 suggested that the civil war legacies of the PLA no longer applied to the realities of combat in Korea. Based on both Soviet aid and domestic mobilisation, the PLA managed to build the material foundation for positional warfare and rapidly improved its logistics. Operationally, on the defensive, the PLA developed combined operations integrating infantry, artillery, and armoured forces. The PLA learned the lessons of the Korean War and strengthened its ties with the Soviet armed forces in order to modernise itself. The Korean War thus transformed the PLA from Civil War victor to Cold War guard.     

‘Second-Class’: The Grievances of Sunni Officers in the Syrian Armed Forces

The defection of a significant number of Sunni officers amidst the ongoing turmoil in Syria created a unique opportunity to get access to original data on the Syrian armed forces. This study draws on extensive fieldwork to probe the sectarian question in the Syrian officer corps. On the basis of a series of interviews conducted throughout the summer of 2014, I investigate the politics and consequences of sectarian stacking in the Syrian military as well as the root causes of Sunni officers’ grievances and alienation. My conclusions draw on an original database that compiles the sectarian affiliations of 81 prominent officers who occupied the most senior military positions under Bashar al-Asad.     

Military Innovation Under Authoritarian Government – the Case of Russian Special Operations Forces

Russian Special Forces saw significant changes to both organization and doctrine in the years after 2008. The special forces of the General Staff’s Main Intelligence Directorate were reduced in number, the organization’s institutional autonomy and rationale were changed, and an entirely new Special Operations Command was established in March 2013. This article seeks to assess the nature, scope and purpose of these changes, and to explain them by drawing on scholarship on military innovation. In particular, the article looks at military innovation in the context of a non-democratic political regime.     

The Determinants of Arms Production

This study analyzes the determinants of arms production in 15 countries using annual panel data from 1997 to 2002. The results suggest that real GDP per capita, military expenditures, arms exports, and arms imports are positively related to arms production.     

Factors influencing the modernization of military-investment economic appraisal systems

Budgetary restrictions resulting from the present international economic crisis have tightened the need to improve efficiency in defense spending, leading to the armed forces having to undertake their duties with fewer resources. Previous reports on the subject have looked into the determining factors and effects of military spending but very few studies have analyzed the determinants for the modernization of the methodology for assessing efficiency. Thus, using a multiple regression statistical model, we have analyzed the appraisal systems in place in 28 countries to identify factors that influence the development of economic assessment of military expenditure. Our findings have revealed three factors that may favor the improvement of appraisal systems with regard to military expenditure: the quality of governance, size of the armed forces, and unemployment levels.     

Political Military Competition and Size and Composition of Government

This paper uses a formal model to analyze the effects of political military competition among states on the size and composition of state. Great economies of scale in warfare, even distribution of military capability among contestants and greater value of contested resources generate higher level of military capacity and growth of government. If there is decreasing return to scale in state revenue generating function and provision of public intermediate inputs, then there will be an increasing size of civilian public sector relative to that of military. The paper finally studies how waves of military revolutions affected international political military competition and the size and composition of government in history.