What is it about?

We analyze the response of the Iranian economy to shocks in its military budget from 1959 to 2007, using impulse response functions and variance decomposition analysis. The Granger causality results show that there is unidirectional causality from the military spending growth rate to the economic growth rate. The response of income growth to increasing shocks in the military budget is positive and statistically significant.

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Why is it important?

Our goal in the current study is to investigate the dynamic relationship between military spending and economic growth in Iran. If energy sanctions affect the military expenditures in a significant way, what kind of implications will it have for the economic growth? Are economic development responses to shocks in military budget statistically significant? Is there a causal relationship between these two variables?

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This page is a summary of: Military Spending and Economic Growth: The Case of Iran, Defence and Peace Economics, October 2012, Taylor & Francis,
DOI: 10.1080/10242694.2012.723160.
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