Military spending, economic growth and structural instability

Case study for Malaysia

Research output: Contribution to journalArticle

Abstract

The present study provides new empirical evidence on the relationship between military spending and economic growth using a case study of Malaysia for the period of 1960-2015. Using the military spending and growth nexus, the new econometric method of bootstrap rolling window (BSRW) approach was used to test the possibility of structural breaks. By applying the full sample bootstrap Granger causality tests, the Granger causal link is found between military spending and gross domestic product (GDP), but parameter instability tests show that the estimated vector autoregressive (VAR) models to be unstable. However, using a BSRW estimation procedure, evidence is found of unidirectional Granger causality from growth to military spending in just 2015. This indicates that standard Granger causality tests, which neither account for structural breaks nor time variation, may be invalid.

Original languageEnglish
Pages (from-to)88-100
Number of pages13
JournalDefence S and T Technical Bulletin
Volume10
Issue number1
Publication statusPublished - 2017

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Economics

Keywords

  • Bootstrap
  • Economic growth
  • Military spending
  • Time varying causality

ASJC Scopus subject areas

  • Engineering(all)

Cite this

Military spending, economic growth and structural instability : Case study for Malaysia. / Wan Sulaiman, Wan Farisan; Abdul Karim, Zulkefly; Khalid, Norlin; Ahmad, Riayati.

In: Defence S and T Technical Bulletin, Vol. 10, No. 1, 2017, p. 88-100.

Research output: Contribution to journalArticle

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