Does higher military spending affect business regulatory and growth specific measures? Evidence from the group of seven (G-7) countries
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The effects of military spending mostly viewed with the growth specific factors while its effect on business regulatory measures mostly unobserved in the previous literature which has been evaluated in this study for robust inferences. The results confirmed the (i) Keynesian defense burden hypothesis, (ii) supply side spillovers and aggregate demand hypothesis, and (iii) non-linear hypothesis by using different military factors including armed forces personnel, arms exports, arms imports, and military expenditures in relation with the business disclosure index, cost of doing business, insurance and financial services, per capita income, inbound FDI, business growth factors, and trade openness. The bidirectional causality found between (i) income growth and military factors, and (ii) military growth and business factors, while it further validates the (i) business led military expenditures, (ii) income led military expenditures, and (iii) military led trade openness in a panel of G-7 countries.
KeywordsMilitary expenditures Business regulatory measures Growth specific factors Robust least squares regression G-7 countries
JEL ClassificationC33 E12 F40
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