Theoretical and Applied Economics
No. 1 / 2019 (618), Spring
Empirically testing Keynesian defense burden hypothesis, nonlinear hypothesis, and spillover hypothesis: Evidence from Asian countries
University of Wah, Wah Cantt, Pakistan
Syed Imran RAIS
University of Wah, Wah Cantt, Pakistan
Syed Tahir Hussain SHAH
University of Wah, Wah Cantt, Pakistan
Khalid ZAMAN
University of Wah, Wah Cantt, Pakistan
Shakira EJAZ
University of Wah, Wah Cantt, Pakistan
Abdul MANSOOR
University of Wah, Wah Cantt, Pakistan
Abstract. The objective of the study is to evaluate different alternative and plausible hypothesis, i.e., Keynesian defense burden hypothesis, nonlinear hypothesis, and spillover hypothesis by controlling governance indicators in a panel of 5 Asian selected countries during a period of 2000 to 2016. The study employed panel Fully Modified OLS (FMOLS) and Dumitrescu-Hurlin panel causality estimates for robust inferences. The results confirmed the defense burden hypothesis where high military expenditures decrease country’s economic growth. The real interest rate, trade openness, and government education expenditures substantially decreases country’s per capita income due to market imperfection, arms import, and low spending on education. The political instability decreases economic growth while voice and accountability and regulatory control largely support country’s economic growth. The causality estimates confirmed the feedback relationship between i) per capita income and exports ii) trade openness and military expenditures, and iii) real interest rate and exports, while growth led military expenditures and arms conflict, military led exports and political instability, and trade led regulatory control established in causality framework.
Contents
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Macroeconomic stability of new member states of the European Union: Fifth enlargement
The global context of economic crises and cohesion funds in the EU
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Models and theories in a frictions and wage rigidities labor market
Human capital and the FDI-Income inequality nexus in African countries: Panel smooth transition regression approach
Are institutions a crucial determinant of cross country economic efficiency? A two-stage double bootstrap data envelopment analysis
The relationship between unemployment and some macroeconomic variables: Empirical evidence from India
Inequity in health care sector in India: A case study of district level in four Indian states
Performance in public administration: Doing outside the box under the rule of procedures
Trade effects based on general equilibrium
Empirically testing Keynesian defense burden hypothesis, nonlinear hypothesis, and spillover hypothesis: Evidence from Asian countries