Author: Paul Dunne, Eftychia Nikolaidou, Dimitrios Vougas
Publisher/Publication: Defence and Peace Economics
Volume/Issue: 12 (1)
DOI/ISBN: 10.1080/10430710108404974
Abstract: The authors in this paper examine the relationship between defense spending and economic growth in Greece and Turkey, using Granger causality techniques and modern vector autoregressive (VAR) methodology to analyze the data. They find that there is a unidirectional causality running from defense spending to economic growth in Greece, while in Turkey, there is a bidirectional causality between the two variables. They conclude that defense spending has a positive effect on economic growth in Greece, but not in Turkey. They also discuss the implications of these findings for policymakers in both countries. Part of the econometric school of study of the post-1945 Greek-Turkish military expenditure and possible arms racing.