Military Versus Non-Military Government Spending and the Shadow Economy
Posted: 29 Oct 2015 Last revised: 19 Apr 2016
Date Written: 2014
Using recent cross-national data, this research examines the determinants of the shadow economy, focusing on the relative effects of military and non-military government spending. Results show that, other things being the same, nations with larger military spending have smaller shadow economies, while the effect of non-military government spending is statistically insignificant. These findings stand up to various robustness checks.
Keywords: Military spending, Non-military spending, Shadow economy, Government, Regulation
JEL Classification: K42, O50, P48
Suggested Citation: Suggested Citation