Author: Paul Dunne, Eftychia Nikolaidou
Publisher/Publication: Defence and Peace Economics
Volume/Issue: 12 (1)
DOI/ISBN: 10.1080/10430710108404976
Abstract: The authors of this paper investigate the determinants of Greek military expenditure as well as whether the high military burden has played an important role in Greece’s poor economic performance over the period 1960-1996. The authors estimate a Keynesian simultaneous equation model with a supply side factor and conclude that the major determinants of Greek defense spending are not economic but strategic (the threat of war). Furthermore, the direct effect of defense spending on economic growth as well as the indirect effects through savings and trade balance are all significantly negative. Part of the econometric school of study of the post-1945 Greek-Turkish military expenditure and possible arms racing.