How much does military spending affect growth? Causal estimates from the World’s non-rich countries

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dc.contributor.author d’Agostino, Giorgio
dc.contributor.author Dunne, John Paul
dc.contributor.author Pieroni, Luca
dc.date.accessioned 2016-12-08T16:26:18Z
dc.date.available 2016-12-08T16:26:18Z
dc.date.issued 2016-12
dc.identifier.citation D’Agostino, G., Dunne, JP., Pieroni, L. (2016). How much does military spending affect growth? Causal estimates from the World’s non-rich countries. A Southern Africa Labour and Development Research Unit Working Paper Number 196. Cape Town: SALDRU, University of Cape Town
dc.identifier.isbn 978-1-928281-57-3
dc.identifier.uri http://hdl.handle.net/11090/855
dc.description.abstract While not always a concern for the general economic growth literature, the debate over the effects of military spending on growth continues to develop, with no consensus, but a deepening understanding of the limitations of previous work. One important issue that has not been adequately dealt with, is the endogeneity of military spending in the growth equation, mainly because of the difficulty of finding any variables that would make adequate instruments. This paper considers this issue, using an endogenous growth model estimated on a large sample of 109 non-high income countries for the period 1998-2012. The empirical analysis is framed within an instrumental variable setting that exploits the increase in military spending that occurs when unrest in a country escalates to turmoil. The estimation results show that endogeneity arising from reverse causality is a crucial issue, with the instrumental variable estimates providing a larger significant negative effect of military spending on growth than OLS would. This result is found to be robust to different sources of heterogeneity and different time periods. en_US
dc.language.iso en en_US
dc.relation.ispartofseries Saldru Working Paper;196
dc.subject Military spending en_US
dc.subject Economic growth en_US
dc.subject Reverse causality en_US
dc.subject Instrumental variable en_US
dc.subject Panel data en_US
dc.title How much does military spending affect growth? Causal estimates from the World’s non-rich countries en_US
dc.type Working Paper en_US


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