Impact of Military Expenditure and Economic Growth on External Debt: New Evidence from a Panel of SAARC Countries

Zaman, Khalid and Iqtidar, Ali Shah and Khan, Muhammad Mushtaq and Ahmad, Mehboob (2013) Impact of Military Expenditure and Economic Growth on External Debt: New Evidence from a Panel of SAARC Countries. Journal of Economic and Social Studies, 3 (2). pp. 131-149. ISSN 1986 – 8502, doi: 10.14706/JECOSS11329

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Abstract

This paper examines the impact of military expenditure and economic growth on external debt for a panel of five selected AA countries including Bangladesh, India, epal, Pakistan and rilanka, over the period of 1988-2008. sing Pedroni’s (2004) test for panel cointegration, it was found that there is a long-run relationship between external debt, economic growth and military expenditure. The study finds that external debt is elastic with respect to military expenditure in the long run and inelastic in the short run. In the long run, 1% increase in military expenditure increase external debt between 1.18 % and 1.24%, while 1% increases in economic growth reduce external debt between 0.64% and 0.79%, by employed and M estimator respectively. In the short run, 1% increase in military expenditure increases external debt by 0.15%, while 1% increase in economic growth reduces external debt by 0.47 %.

Item Type: Article
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Journal of Economic and Social Studies
Depositing User: Mrs. Emina Mekic
Date Deposited: 29 Apr 2014 14:47
Last Modified: 29 Apr 2014 14:47
URI: http://eprints.ibu.edu.ba/id/eprint/2391

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