Causality between Defence Spending and Economic Growth: The Case of Mainland China

Using cointegration and Granger causality tests, examines the causal relationship between defence spending and economic growth in mainland China over the period 1950-1991. The results show that defence spending is not cointegrated with the real economic growth rate, implying the lack of any long-run equilibrium relationship between the two variables. In addition, Granger causality tests indicate causal independence between the two variables.

[1]  Riccardo Faini,et al.  Defense Spending, Economic Structure, and Growth: Evidence among Countries and over Time , 1984, Economic Development and Cultural Change.

[2]  C. Granger.  Investigating Causal Relations by Econometric Models and Cross-Spectral Methods , 1969 .

[3]  Wayne H. Joerding.  Economic growth and defense spending: Granger Causality , 1986 .

[4]  Monte R. Bullard,et al.  Defining the Role of the PLA in the Post-Mao Era , 1986 .

[5]  C. Granger,et al.  Co-integration and error correction: representation, estimation and testing , 1987 .

[6]  Nicole Ball,et al.  Defense and Development: A Critique of the Benoit Study , 1983, Economic Development and Cultural Change.

[7]  Saadet Deger,et al.  Economic Development and Defense Expenditure , 1986, Economic Development and Cultural Change.

[8]  Cheng Hsiao,et al.  AUTOREGRESSIVE MODELLING AND MONEY-INCOME CAUSALITY DETECTION , 1981 .

[9]  Anil K. Bera,et al.  Efficient tests for normality, homoscedasticity and serial independence of regression residuals , 1980 .

[10]  A. Chowdhury.  A Causal Analysis of Defense Spending and Economic Growth , 1991 .

[11]  Dan Smith,et al.  The economics of militarism , 1983 .

[12]  David Lim,et al.  Another Look at Growth and Defense in Less Developed Countries , 1983, Economic Development and Cultural Change.

[13]  Emile Benoit,et al.  Defense and economic growth in developing countries , 1971 .

[14]  Anil K. Bera,et al.  Efficient tests for normality, homoscedasticity and serial independence of regression residuals: Monte Carlo Evidence , 1981 .

[15]  R. Engle,et al.  COINTEGRATION AND ERROR CORRECTION: REPRESENTATION , 1987 .

[16]  Emile Benoit,et al.  Growth and Defense in Developing Countries , 1978, Economic Development and Cultural Change.