Military Spendings and Economic Growth in OPEC Selected Countries: Granger Causality Test in Heterogeneous mixed Panels Approach

Document Type : Research Paper

Authors

1 Assistant Professor, Bu-Ali Sina University of Hamedan

2 P.H.D student, Lorestan University

Abstract

This study investigates the causal linkages between military spending and economic growth in OPEC selected countries (i.e. Algeria, Angola, Nigeria, Venezuela, Iran, Kuwait, Saudi Arabia and Ecuador) by focusing country-specific analysis for the period 1995–2012. For this, the panel causality testing approach, the method developed by Emirmahmutoglu and Kose (2011) based on the vector autoregressive (VAR) model and Wald tests with the country specific bootstrap critical values, is applied. This test, accounts cross dependency and heterogeneity among the members of the panel and also, co-integration between variables. The results confirm the growth-military spending hypothesis for Algeria, Nigeria, Iran and Kuwait and verify the Neutrality Hypothesis for Angola, Venezuela, Saudi Arabia and Ecuador. Also, the growth-military spending hypothesis for the total panel is confirmed.

Keywords

References

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History

  • Receive Date: 01 March 2015
  • Revise Date: 02 March 2015
  • Accept Date: 10 March 2015

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