Military expenditure, economic growth and structural instability : a case study of South Africa

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dc.contributor.author Aye, Goodness Chioma
dc.contributor.author Balcilar, Mehmet
dc.contributor.author Dunne, John P.
dc.contributor.author Gupta, Rangan
dc.contributor.author Van Eyden, Renee
dc.date.accessioned 2014-03-31T07:19:48Z
dc.date.issued 2014
dc.description.abstract This paper makes two contributions to the growing literature on the military expenditureeconomic growth nexus. It provides a case study of a developing country, South Africa, and considers the possibilities of structural breaks in the relationship, applying newly developed econometric methods. Taking annual data from 1951 to 2010 and full sample bootstrap Granger non-causality tests, initially we find no causal link between military expenditure and GDP. Then, using parameter instability tests, the estimated VARs are found to be unstable. However, when a bootstrap rolling window estimation procedure is used to deal with time variation in the parameters, bidirectional Granger causality between the two series becomes evident in various subsamples. While military expenditure has positive predictive power for GDP at certain initial periods, it has negative predictive power at some later periods in the sample. Similar results were obtained for the causality running from GDP to military expenditure. These findings illustrate that conclusions based on the standard Granger causality tests, which neither account for structural breaks nor time variation in the relationship may be invalid. en_US
dc.description.embargo 2016-07-01
dc.description.librarian hb2014 en_US
dc.description.uri http://www.tandfonline.com/loi/gdpe20 en_US
dc.identifier.citation Aye, GC, Balcilar, M, Dunne, JP, Gupta, R & Van Eyden 2014, 'Military expenditure, economic growth and structural instability : a case study of South Africa', Defence and Peace Economics, vol. 25, no. 6, pp. 619-633. en_US
dc.identifier.issn 1024-2694 (print)
dc.identifier.issn 1476-8267 (online)
dc.identifier.other 10.1080/10242694.2014.886432
dc.identifier.uri http://hdl.handle.net/2263/37214
dc.language.iso en en_US
dc.publisher Routledge en_US
dc.rights © Taylor & Francis. This is an electronic version of an article published in Defence and Peace Economics, vol. 25, no. 6, pp. 619-633. Defence and Peace Economics is available online at : http://www.tandfonline.com/loi/gdpe20. en_US
dc.subject Military spending en_US
dc.subject Economic growth en_US
dc.subject Bootstrap en_US
dc.subject Time varying causality en_US
dc.title Military expenditure, economic growth and structural instability : a case study of South Africa en_US
dc.type Postprint Article en_US


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