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Asymmetric and Threshold Effect of Military Expenditure on Economic Growth: Insight from an Emerging Market

  • James Temitope Dada ORCID logo EMAIL logo , Akinwumi Sharimakin , Mamdouh Abdulaziz Saleh Al-Faryan ORCID logo , Mosab I. Tabash and Adams Adeiza
Published/Copyright: September 10, 2024

Abstract

This study aims to investigate the asymmetric effect of military expenditure on economic growth in Nigeria. Furthermore, it determines the threshold level of military expenditure that spurs or hinders economic growth in Nigeria. To achieve the study’s objectives, the nonlinear autoregressive distributed lag (NARDL) and dynamic threshold autoregressive (TAR) techniques are applied as estimation techniques to data from 1981 to 2020. The findings from the study show that (1) positive shocks in military expenditure negatively impact economic growth in the short run, while the effect turns positive in the long run. (2) Negative military expenditure shocks negatively influenced economic growth in Nigeria in both periods. (3) The result from the threshold regression found a threshold value of 0.579 for military expenditure. Based on these findings, policymakers must consider the inherent tendency of asymmetry and nonlinearity in military expenditure when formulating policies related to government spending.

JEL Classification: C32; H56

Corresponding author: James Temitope Dada, Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria, E-mail:

Appendix
Figure 1: 
CUSUM of symmetric model.
Figure 1:

CUSUM of symmetric model.

Figure 2: 
CUSUMSQ of symmetric model.
Figure 2:

CUSUMSQ of symmetric model.

Figure 3: 
CUSUM of asymmetric model.
Figure 3:

CUSUM of asymmetric model.

Figure 4: 
CUSUMSQ of asymmetric model.
Figure 4:

CUSUMSQ of asymmetric model.

Figure 5: 
Multiplier of military expenditure.
Figure 5:

Multiplier of military expenditure.

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Received: 2023-12-22
Accepted: 2024-08-24
Published Online: 2024-09-10

© 2024 Walter de Gruyter GmbH, Berlin/Boston

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