This paper investigates the long run relationship between military expenditures and economic growth in case of Pakistan and India using ARDL bounds testing approach for cointegration and Clemente–Montanes–Reyes approach for unit roots keeping structural breaks in a longer time series data. The study confirms the positive relationship between military expenditures and economic growth at the initial stages and then a negative relationship after a critical point for both countries. The short run results also confirm that the military expenditures can explain the per capita GDP in the short run. Importantly, the causality runs from military expenditures to GDP.
Quality & Quantity – Springer Journals
Published: May 15, 2015
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