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Corresponding Author:
Emmanuel Anoruo, Department of Accounting and Management Information Systems, Coppin State University, Baltimore, Mariland USA

Coauthors:
Uchenna Akpom, Department of Accounting, Finance and Economics, The University of West Alabama

Military Spending-Household Consumption Nexus: A Heterogeneous Panel Data Approach

Volume 69 - Issue 3, August 2016
(pp. 175-192)
JEL classification: E21, E62
Keywords: Military Spending, Household Consumption, Causality, Cointegration

Abstract

This paper explores the relationship between military spending and household consumption for a panel of fifteen African countries. Specifically, the study seeks to ascertain the substitutability or complementarity effects of military spending on household consumption using the panel Granger causality tests. The results from the unit root and cointegration tests indicate that the military spending and household consumption series have one order of integration as well as cointegrated. The Granger causality test results reveal that there is evidence of long run bidirectional causality between military spending and household consumption for the entire panel. The results from the Panel Dynamic OLS indicate that military spending and household consumption positively influence each other in the long run. Taken together, the results suggest that military spending and household consumption are complementary.


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Institute for International Economics
of the Genoa Chamber of Commerce


Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)
www.ge.camcom.gov.it