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Economic research - Ekonomska istraživanja, Vol. 25 No. 1, 2012.

Preliminary communication

MILITARY SPENDING AND ECONOMIC GROWTH IN PAKISTAN: NEW EVIDENCE FROM ROLLING WINDOW APPROACH

Muhammad Shahbaz
Muhammad Shahbaz Shabbir

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Abstract

Purpose: This paper re-investigates causality between military spending and economic growth by applying autoregressive distributed lag model or ARDL bounds testing approach to cointegration. Furthermore, rolling window approach (RWA) to cointegration is also applied to confirm the established long run relation between the variables. The VECM Granger causality is used to detect the direction of causality between military spending and economic growth. Our empirical exercise indicated long run relationship between military spending and economic growth as confirmed by rolling window approach. Moreover, negative unidirectional causality is found running from defense spending to economic growth. This paper opens up new sights for policymaking authorities to sustain economic growth by curtailing defense spending.

Keywords

Defence Spending; Growth; Cointegration; Causality

Hrčak ID:

80018

URI

https://hrcak.srce.hr/80018

Publication date:

1.4.2012.

Article data in other languages: croatian

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