Military spending multiplier of Turkey : an empirical analysis for Turkey

Abstract

This study estimates the military spending multiplier of Turkey over the period of 1980- 2004 by employing a four-equation econometric model. The different views that appear in the literature on the relationship between defense spending and economic growth are identified and it is concluded that there is no agreement as to the exact nature of the relationship between defense spending and growth. The study also deals with the current trends in Turkish economy, analyzes government spending and military spending of Turkey. The results of this study indicate that defense expenditures have no significant direct or indirect effect on economic growth. On the other hand, there is an insignificant positive military spending multiplier of 0.04. In other words, 1 percent increase in military expenditures results in a 0.04 percent (not statistically significant) increase in GNP.