The Causal Relationship between Military Spending and Unemployment in the EU15

21 Pages Posted: 16 Jan 2015

See all articles by Marcos Sanso-Navarro

Marcos Sanso-Navarro

Universidad de Zaragoza

María Vera-Cabello

Centro Universitario de la Defensa de Zaragoza

Date Written: January 15, 2015

Abstract

This paper analyses the possible presence of Granger causality between military spending and unemployment rates in the EU15 countries. The panel bootstrap test applied allows us to control for both the presence of cross-country heterogeneity and cross-sectional dependence. Considering two alternative measures of military spending, we find little evidence against the null hypothesis according to which it does not cause unemployment. These statistically significant causal relationships are found in countries that devote a higher share of their defence budget expenditures to personnel.

Keywords: Defence spending, unemployment, causality, SUR estimation, bootstrap

JEL Classification: C32, E24, H56, O40, O57

Suggested Citation

Sanso-Navarro, Marcos and Vera-Cabello, María, The Causal Relationship between Military Spending and Unemployment in the EU15 (January 15, 2015). Available at SSRN: https://ssrn.com/abstract=2550136 or http://dx.doi.org/10.2139/ssrn.2550136

Marcos Sanso-Navarro

Universidad de Zaragoza ( email )

Facultad de Economía y Empresa
Departamento de Análisis Económico
Zaragoza, 50005
Spain
+34 876 554 629 (Phone)

HOME PAGE: http://personal.unizar.es/marcossn

María Vera-Cabello (Contact Author)

Centro Universitario de la Defensa de Zaragoza ( email )

Academia General Militar, Ctra. de Huesca, s/n
Zaragoza, Zaragoza 50009
Spain

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