| ID | 182551 |
| Title Proper | Nexus between External Debts and Military Expenditures for the Selected Transition Economies |
| Other Title Information | a Panel Threshold Regression Approach |
| Language | ENG |
| Author | Çolak, Olcay ; Özkaya, M Hilmi |
| Summary / Abstract (Note) | The dissolution of the Eastern Bloc at the end of the Cold War compelled most of the centrally-planned economies to adjust their economic order to become free market economies. During the transition process, most of those countries experienced severe external debt overhang problems, due to excessive budget deficits and rapid liberalization of foreign trade and capital account regimes. In addition, most of those countries were facing political unrest due to internal and external conflicts by the end of the Cold War, with rampant weapons proliferation and the arms race. By employing the fixed effect panel threshold regression approach, we unveil the non-linear relationship between military spending and external indebtedness, which has not been examined for the selected twelve transition economies over the period from 1997 to 2016. Our findings reveal the presence of double threshold effects that are embedded in military expenditure, and the debt-accelerating effect of military spending emerges after the first regime. In the early stages, countries tend to finance military expenditure with the help of domestic savings, whereas the requirement for external borrowing emerges later as domestic savings become inadequate. We have also produced some crucial policy recommendations to reflect our findings. |
| `In' analytical Note | Defence and Peace Economics Vol. 32, No.7; Nov 2021: p.882-898 |
| Journal Source | Defence and Peace Economics Vol: 32 No 7 |
| Key Words | Military Expenditure ; Transition Economies ; External Debts ; Panel Threshold Regression |