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Spain's economic growth over the last few decades constitutes a rather distinctive case in post-World War II Europe, which has attracted international academic interest. This paper examines the relationship between Spain's military expenditure and economic growth during the period 1954-2021 to shed further light. Using the recently developed method of Dynamic Autoregressive Distributive Lag (DARDL) simulation proposed by Jordan and Philips (2018) and the Kernel-Based Regularized Least Squares (KRLS) technique which accounts for potential non-linearities, interactions, and heterogeneous effects, this paper tests the short and long – run equilibrium relationship between military expenditure and economic growth in Spain. Furthermore, with the cumulative sum (CUSUM) and cumulative sum of squares (CUSUMSQ) tests, we examine the stability of the above relationship. The results show that there is a positive short and long – run relationship between military expenditure and economic growth in Spain during the period under study. However, when we stratify our sample (before and after Spain's democratization), the positive relationship is sustained only during the years of the non – democratic regime. This has further policy implications as policymakers in Spain need to carefully balance national security concerns with the need for sustained economic growth. [ABSTRACT FROM AUTHOR]

Although the economic effects of defense expenditures have become an issue of intense interest over the recent decades, little is known about how the individual components of military spending affect the economy. Nevertheless, military spending is highly heterogeneous in its nature consisting of assorted categories that broadly encompass salaries' payment, operations, training, research and development, and maintenance of equipment, arms and facilities. Naturally, this implies that military spending can affect the economy in various and probably contradictory ways. Hence, by considering this distinctive element of military spending, the present paper aims to uncover the economic effects of the most important components of the US defense budget focusing on a period from 1949 to 2021. Applying linear and non–linear methods on a Barro–style regression, the statistical evidence reported herein suggests that heavy reliance on the military sector entails potentially high opportunity costs. [ABSTRACT FROM AUTHOR]

Until today, the great majority of the relevant literature is dominated by growth models that assume common structural parameters and Total Factor Productivity (TFP) evolution across countries. In the context of the modified Solow convergence equation, the role of the present paper is to highlight the importance of incorporating cross–country differences, both in observables and unobservables, in the investigation of the defense–growth nexus. Special attention is paid to the heterogeneity in TFP growth and the cross–country dependence induced by global shocks. Furthermore, it analyzes the econometric issues involved by providing a brief review of various heterogeneous dynamic panel estimators. The presented estimators are then applied to two alternative panel specifications of the Solow model. Overall, the empirical application revealed that the Dynamic Common Correlated Effects (DCCE) estimator seems to be the most reliable option among the various dynamic panel estimators employed. [ABSTRACT FROM AUTHOR]

A great part of the defense literature is focused on the interaction between military spending and economic activity. To investigate this interrelationship, researchers have applied a wide variety of methodologies with totally different assumptions and statistical properties. Until today, however, no detailed examination of the sensitivity of empirical results to the various statistical methods has been provided in the literature. The present paper attempts to fill this gap by providing, firstly, a review of the majority of the time series methodologies used in the defense–growth literature and, secondly, an econometric application using data of the U.S. economy over the period 1961–2015 in order to establish empirically the association between econometric procedures and empirical results. The empirical findings of the conducted analysis suggest that statistical methods can indeed become a significant source of variation in the investigation of the defense–growth nexus. [ABSTRACT FROM AUTHOR]