The Long-Run Causal Relationship between Military Expenditure and Economic Growth in China: Revisited

Defence and Peace Economics, Forthcoming

35 Pages Posted: 18 May 2013

See all articles by Ourania Dimitraki

Ourania Dimitraki

University of Bedfordshire; University of Essex - Essex Business School

Faek Menla Ali

Brunel University London

Date Written: May 17, 2013

Abstract

This paper re-examines the long-run causal relationship between military expenditure and economic growth in China over the period 1952–2010. An empirical econometric analysis based on a Barro-style growth model is conducted. By employing the Bartlett corrected trace test, which provides better approximations of the finite sample distribution to determine the rank of cointegration, the results support the existence of a single long-run equilibrium relationship between the variables. Furthermore, it is confirmed that the cumulated shocks of military expenditure primarily originate from different components of shocks that relate to economic development rather than the other way round.

Keywords: Bartlett corrected trace test, China, Cointegration, Economic growth, Long-run, Military expenditure

JEL Classification: H5, O41, O47

Suggested Citation

Dimitraki, Ourania and Menla Ali, Faek, The Long-Run Causal Relationship between Military Expenditure and Economic Growth in China: Revisited (May 17, 2013). Defence and Peace Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2266406

Ourania Dimitraki

University of Bedfordshire ( email )

Vicarage St
Luton, LU1 3JU
United Kingdom

University of Essex - Essex Business School ( email )

Elmer Approach Southend on Sea
Essex, SS11LW
United Kingdom

Faek Menla Ali (Contact Author)

Brunel University London ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

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