Defense expenditure and economic growth: A case study of Pakistan

The objective of this study was to examine whether there is exists a long run relationship between defense expenditure and economic growth, and investigate the plausibility of using defense expenditure as a macroeconomic stabilization tool (referred as Military Keynesianism Hypothesis) in case of...

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Main Author:	Haseeb, Muhammad
Format:	Thesis
Language:	eng eng
Published:	2014
Subjects:	HJ Public Finance U Military Science (General)
Online Access:	https://etd.uum.edu.my/4362/1/s812881.pdf https://etd.uum.edu.my/4362/7/s812881_abstract.pdf
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id	my-uum-etd.4362
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abu Bakar, Nor Aznin
topic	HJ Public Finance U Military Science (General)
spellingShingle	HJ Public Finance U Military Science (General) Haseeb, Muhammad Defense expenditure and economic growth: A case study of Pakistan
description	The objective of this study was to examine whether there is exists a long run relationship between defense expenditure and economic growth, and investigate the plausibility of using defense expenditure as a macroeconomic stabilization tool (referred as Military Keynesianism Hypothesis) in case of Pakistan over the period 1975–2010. The Autoregressive Distributed Lag (ARDL) bounds testing approach was used to find out long run relationship between defense expenditure, economic growth, development expenditure, inflation and national saving. The Augmented Dickey-Fuller (ADF) test was used for checking stationarity. The results of ADF test revealed that inflation and saving are stationary at level while defense expenditure, development expenditure and GDP become stationary at first difference. Results of ARDL indicated that data is stable and confirmed the existence of long run relationship. The robustness of the model has been confirmed by diagnostic tests for serial correlation, function form, normality, hetroscedasticity, and structural stability for the model. The selected model generally passes all diagnostic tests and proves the robustness of the selected model. Moreover, results show that defense expenditure has negative impact on economic growth while saving has positive impact on economic growth but other variables have no impact on economic growth. These results for long run negative relationship between defense expenditure and economic growth suggest that in case of Pakistan MKH does not hold over the estimation period. The negative long run relationship between defense expenditure and economic growth implies that the policy makers need to have a greater focus on development spending as compared to defense spending.
format	Thesis
qualification_name	other
qualification_level	Master's degree
author	Haseeb, Muhammad
author_facet	Haseeb, Muhammad
author_sort	Haseeb, Muhammad
title	Defense expenditure and economic growth: A case study of Pakistan
title_short	Defense expenditure and economic growth: A case study of Pakistan
title_full	Defense expenditure and economic growth: A case study of Pakistan
title_fullStr	Defense expenditure and economic growth: A case study of Pakistan
title_full_unstemmed	Defense expenditure and economic growth: A case study of Pakistan
title_sort	defense expenditure and economic growth: a case study of pakistan
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2014
url	https://etd.uum.edu.my/4362/1/s812881.pdf https://etd.uum.edu.my/4362/7/s812881_abstract.pdf
_version_	1747827722644619264
spelling	my-uum-etd.43622022-05-23T01:26:44Z Defense expenditure and economic growth: A case study of Pakistan 2014 Haseeb, Muhammad Abu Bakar, Nor Aznin Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HJ Public Finance U Military Science (General) The objective of this study was to examine whether there is exists a long run relationship between defense expenditure and economic growth, and investigate the plausibility of using defense expenditure as a macroeconomic stabilization tool (referred as Military Keynesianism Hypothesis) in case of Pakistan over the period 1975–2010. The Autoregressive Distributed Lag (ARDL) bounds testing approach was used to find out long run relationship between defense expenditure, economic growth, development expenditure, inflation and national saving. The Augmented Dickey-Fuller (ADF) test was used for checking stationarity. The results of ADF test revealed that inflation and saving are stationary at level while defense expenditure, development expenditure and GDP become stationary at first difference. Results of ARDL indicated that data is stable and confirmed the existence of long run relationship. The robustness of the model has been confirmed by diagnostic tests for serial correlation, function form, normality, hetroscedasticity, and structural stability for the model. The selected model generally passes all diagnostic tests and proves the robustness of the selected model. Moreover, results show that defense expenditure has negative impact on economic growth while saving has positive impact on economic growth but other variables have no impact on economic growth. These results for long run negative relationship between defense expenditure and economic growth suggest that in case of Pakistan MKH does not hold over the estimation period. The negative long run relationship between defense expenditure and economic growth implies that the policy makers need to have a greater focus on development spending as compared to defense spending. 2014 Thesis https://etd.uum.edu.my/4362/ https://etd.uum.edu.my/4362/1/s812881.pdf text eng public https://etd.uum.edu.my/4362/7/s812881_abstract.pdf text eng public other masters Universiti Utara Malaysia Abbas, H. (2011). Reforming Pakistan„s police and law enforcement infrastructure is it too flawed to fix?. Special Report 266 United States Institute of Peace. Atesoglu, H. S. (2002). Defense Spending Promotes Aggregate Output in the United States Evidence from Cointegration Analysis. Defense and Peace Economics, 13(1), 55-60. Abu-Bader, S. and Abu-Qarn, A.S. (2003). Government expenditure, military spending and economic growth:causality evidence from Egypt, Israel and Syria. Journal of Policy Modeling, 25(1), 567-583. Agha, A.S. (2001). 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Defense expenditure and economic growth: A case study of Pakistan

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