Masih, Abdul M.M. and Masih, Rumi and Hasan, Mohammad S (1997) New evidence from an alternative methodological approach to the defence spending-economic growth causality issue in the case of mainland China. Journal of Economic Studies, 24 (3). pp. 123-140. ISSN 0144-3585.
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Proposes to re-examine empirically the causal relationship between defence spending and economic growth in mainland China. First, using a VAR modelling technique with suitable diagnostics, e.g. Akaike’s FPE statistics and a likelihood ratio test for over- and under-fitting the causal model, the results indicate a positive unidirectional causality flowing from defence spending to economic growth. Second, by evaluating a dynamic vector error-correction model, variance decomposition and impulse response functions, then analyses the direction, duration and strength of Granger-causality between defence spending and economic growth. The results broadly indicate that defence spending and economic growth did share a common trend over the sample period under analysis, but it was the former which stimulated the latter. Moreover, it is defence spending that has a much more perceptible and prolonged effect on economic growth, giving rise to implications that although expenditure on defence may have been politically motivated, over the long-run this spending did play a significant indirect role in enhancing the growth potential of this, for many years, closed-door economy.
|Uncontrolled keywords:||Cointegration, Defence, Growth, Models|
|Subjects:||H Social Sciences|
|Divisions:||Faculties > Social Sciences > Kent Business School > Accounting and Finance|
|Depositing User:||Rebecca Stevenson|
|Date Deposited:||27 Jan 2010 12:19|
|Last Modified:||27 Jan 2010 12:19|
|Resource URI:||http://kar.kent.ac.uk/id/eprint/23611 (The current URI for this page, for reference purposes)|
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