Defense investment and economy: a study on the causality relationship

Abstract

The effect of defense expenditure on economic growth is the subject of many debates. This study investigates the relationship between defense expenditure and economic growth applying Granger causality test. To do this, data of military expenditure, gross domestic product, and gross capital formation from six countries are analyzed. They are: Brazil, China, United States of America, France, United Kingdom and Russia. The findings of the study indicate Granger causality relationship for some of these countries.