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Cointegration Analysis of the Economic Growth, Military Expenditure, and External Debt: Evidence from Pakistan

Journal of Economics and Business Research

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Title Cointegration Analysis of the Economic Growth, Military Expenditure, and External Debt: Evidence from Pakistan
 
Creator Zaman, Khalid
Ali Shah, Iqtidar
Mushtaq Khan, Muhammad
Ahmad, Mehboob
 
Description This paper attempts to examine the relationship between real military spending (RME), level of economic activity (RGNP), and real external debt (RED) by using a Johansen multivariate cointegration framework. The analysis is carried out using time series data over 1980-2008 The study investigates the long-run effects and short-run dynamics of the effect of rise in RGNP and RME on RED Pakistan. The quantitative evidence shows that external debt is more elastic with respect to military expenditure in the long run, whereas, there has been insignificant effect in the short-run. In the long-run, 1.00% increase in military expenditure leads to an increase in external debt by almost 3.96%. On the other hand, 1.00% increases in economic growth decreases external debt by 2.13%. In the short run, 1.00% increase in economic growth reduces external debt by 2.90%. The results presented in this study reinforce the importance to government, academic, and policy makers.
 
Publisher Journal of Economics and Business Research
 
Contributor —
 
Date 2014-11-05
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.uav.ro/jour/index.php/jebr/article/view/346
 
Source Journal of Economics and Business Research; Vol 18, No 1 (2012): J of Economics & Busniss Research; 91 - 117
2069-9476
2068-3537
 
Language eng
 
Relation http://www.uav.ro/jour/index.php/jebr/article/view/346/pdf_110