engleski

Causal relationship between categories of defense expenditures and GDP

This paper investigates the causal relationship between categories of defense expendi-tures and gross domestic product. Based on a review of scientific papers in this field it is easy to conclude that the researches were performed only at the level of aggregate expendi-tures for defense in interaction with gross domestic product. Categories of defense expendi-tures are divided on personnel expenditures, equipment expenditures, infrastructure expend- itures and other expenditures. Countries included in research are Belgium, Canada, Den- mark, Greece, Italy, Luxemburg, Netherlands, Norway, Portugal, Turkey, UK and USA. Time interval of research is the period from 1986 till 2015. Main data sources are The World Bank, Stockholm International Peace Research Institute and official reports of the North Atlantic Treaty Organization. Granger causality test which includes procedures proposed by Toda and Yamamoto (1995) was used in analysis to test the hypothesis by using VAR models. For long run analysis Johansen’s co-integration test is used. Results showed that on the long run there is no co-integration between variables in all countries but, on the other hand, on the short run the results are not uniform.

defense expenditure, categories of defense expenditures, GDP, Granger causality

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