Interdependence between US and European Military Spending: A Panel Cointegration Analysis (1988-2013)
9 Pages Posted: 24 May 2015
Date Written: May 23, 2015
The aim of this paper is to study the interdependence of military spending between US and a panel of European countries in the period 1988-2013. The empirical estimation is based on a: (i) a unit root tests and a cointegration analysis; (ii) FMOLS and DOLS estimations. General results highlight that military spending of European countries is: (1) positively associated with US military spending and (2) negatively associated with average military spending of other European countries.
Keywords: Military Spending, interdependence, Panel Cointegration, Fully Modified OLS, Dynamic OLS
JEL Classification: H56; H63; F52
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