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Symmetric and asymmetric relationships between renewable energy, oil imports, arms exports, military spending, and economic growth in China

Ben Youssef, Slim (2021): Symmetric and asymmetric relationships between renewable energy, oil imports, arms exports, military spending, and economic growth in China.

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Abstract

This paper evaluates the symmetric and asymmetric relationships between military spending (MS) and oil imports (OIM) in China. For this purpose, we use the autoregressive distributed lag (ARDL) and the non-linear ARDL approaches, with annual data ranging from 1989 to 2016. In the long-run, MS increases OIM, renewable energy (RE) consumption, and gross domestic product (GDP). RE consumption increases arms exports (AE) and GDP but reduces OIM. Interestingly, OIM reduces AE and AE harm GDP. OIM seem to have a non-linear and asymmetric impact on MS both in the short- and long-run. In the long-run, an increase in OIM by 1% increases MS by 0.853%, while a reduction of OIM by 1% reduces MS by 1.467%. The cumulative dynamic multiplier effects indicate that China reacts very rapidly to positive shocks, but is very cautious about reducing its MS in the event of a negative shock. It appears that China is prompt to reduce considerably its MS whenever it is assured about its energy security. This could be partially achieved by increasing its RE consumption, and the military sector is invited to contribute especially through its R&D activities. This could lead to a cleaner environment and a more peaceful world.

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