Government expenditures, military spending and economic growth: Causality evidence from Egypt, Israel, and Syria

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Abstract

This study uses multivariate cointegration and variance decomposition techniques to investigate the causal relationship between government expenditures and economic growth for Egypt, Israel, and Syria, for the past three decades. When testing for causality within a bivariate system of total government spending and economic growth, we find bi-directional causality from government spending to economic growth with a negative long-term relationship between the two variables. However, when testing for causality within a trivariate system-the share of government civilian expenditures in GDP, military burden, and economic growth-we find that the military burden negatively affects economic growth for all the countries, and that civilian government expenditures cause positive economic growth in Israel and Egypt.

Original languageEnglish
Pages (from-to)567-583
Number of pages17
JournalJournal of Policy Modeling
Volume25
Issue number6-7
DOIs
StatePublished - 1 Sep 2003

Keywords

  • Economic growth
  • Error correction models
  • Government expenditure
  • Granger causality
  • Middle East
  • Military burden

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