Modelling the relationship between defense spending and economic growth for the Fiji Islands

Narayan, Paresh Kumar and Singh, Baljeet 2007, Modelling the relationship between defense spending and economic growth for the Fiji Islands, Defence and peace economics, vol. 18, no. 4, pp. 391-401.

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Title Modelling the relationship between defense spending and economic growth for the Fiji Islands
Author(s) Narayan, Paresh Kumar
Singh, Baljeet
Journal name Defence and peace economics
Volume number 18
Issue number 4
Start page 391
End page 401
Publisher Routledge
Place of publication London, England
Publication date 2007-08
ISSN 1024-2694
1476-8267
Keyword(s) military expenditure
Fiji
bounds test for cointegration
Granger causality
Summary The goal of this paper is to examine the nexus between GDP and military expenditure. We model this relationship within a multivariate framework by including exports in the model. We use the recently developed bounds testing approach to cointegration and find that there is a long run relationship among the variables when GDP is the endogenous variable. Normalizing on GDP and using four different estimators, we find that in the long run both military expenditure and exports have a positive impact on GDP. Finally, using the Granger causality test, we find that there is evidence for military expenditure Granger causing exports and exports Granger causing GDP, implying that military expenditure indirectly Granger causes GDP in the short run. In the long run, we find that both military expenditure and exports Granger cause GDP for Fiji. Our findings are consistent with the Keynesian school of thought, leading us to derive some policy implications.
Language eng
Field of Research 140299 Applied Economics not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2007, Taylor & Francis
Persistent URL http://hdl.handle.net/10536/DRO/DU:30018621

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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