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Military Expenditure and Economic Growth: The South American Case.

Riveros Gavilanes, John Michael (2020): Military Expenditure and Economic Growth: The South American Case.

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Abstract

The present article establishes an empirical approximation related to the influence of the military expenditure in the economic growth for the case of the countries of South America. The main theoretical framework is based in the approximation of the Augmented Solow model considering the effect of the share of military spending in the factor productivity as it was proposed by Knight et al. (1996). The methodology follows the estimation of a panel vector autoregressive model for the period of 1977-2016, considering all the variables as endogenous, within this, it is provided the Granger-causality tests among the equations. The results determinate that military expenditure is not statistically significant to explain the variation in the output of the economy, meanwhile it existed a causality relation between the savings of the economy and the military expenditure for this continent.

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