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Corresponding Author:
Mduduzi Biyase, University of Johannesburg, School of Economics, South Africa

Coauthors:
Hinaunye Eita, School of Economics, University of Johannesburg, South Africa
Thomas Udimal, School of Economics and Management, Southwest Forestry University, China
Talent Zwane, School of Economics, University of Johannesburg, South Africa

Military Spending and Inequality in South Africa: An ARDL Bound Testing Approach to Cointegration

Volume 75 - Issue 2, May 2022
(pp. 241-268)
JEL classification: C22, H56
Keywords: Inequality, Military Spending, Error Correction, ARDL Bounds Testing

Abstract

There has been an increasing interest in understanding the relationship between inequality and military spending. However, given the multifaceted nature of the relationship between these variables, studies have yielded inconsistent results. While some studies in this field consider military spending to be unfavorable to inequality, some studies have found evidence to suggest that it reduces inequality. In South Africa there is comparatively no empirical work investigating the issue. To achieve this objective, we used time series data from 1980-2017 to investigate this relationship in South Africa and help to shed some light on the empirical puzzle, by using autoregressive distributed lag (ARDL) and bounds test for cointegration method. The empirical result established a significant long-run relationship between military expenditures and income inequality in South Africa. An increase in the military expenditures leads to a reduction in the rate of income inequality. The result, however, showed that an increase in per capita income leads to an increase in the rate of income inequality.

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Military Spending and Inequality in South Africa: An ARDL Bound Testing Approach to Cointegration

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Institute for International Economics of the Genoa Chamber of Commerce

Institute for International Economics
of the Genoa Chamber of Commerce