An Analysis of Relationship between Military Expenditure and Economic Growth in Turkey (1960-2016)

A growth number of empirical studies have investigated the relationship between military expenditures and economic growth in Turkey. However, there is no consensus on the relationship between military expenditures and economic growth in literature. The aim of this study is re-examining the relationship between military expenditures and economic growth covering the period of 1960 and 2016 within the context of cointegration and causality analysis. In addition to traditional analysis, we employed cointegration test with multi structural breaks and time-varying causality analysis. According toBayer and Hanck's (2013) standart cointegration test results the military expenditures negatively affect long-run GDP per capita. However, Maki's (2012) cointegration test with multiple breaks results show that there is no relationship between military expenditures and GDP per capita. On the other hand, time-varying causality results also indicate that the causal linkage between military expenditures and economic growth has disappeared due to economic and politic shifts in Turkey after the middle of 1970s.