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
Date Written: May 17, 2013
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
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