Asymmetric Causality between Economic Growth and Military Expenditures: The Case of Turkey

Abstract

In the last decade, as many developing countries, Turkey has devoted its fiscal resources to the military spending as a part of its growth and development strategy. This study examines whether there exists asymmetric causality between economic growth and military expenditures. Covering a lengthy time period, this paper explores how military expenditure causes economic growth by applying Time-Varying Asymmetric Causality Test. Empirical methodology closely follows Granger and Yoon (2002) and Hatemi-J (2012). In particular, our results do not suggest causality between original time series. However, in the light of the findings, it seems that there is a unidirectional causality between the shocks (positive and negative components) of military expenditures and growth within certain time periods.