DEFENSE SPENDING AND ECONOMIC GROWTH IN TURKEY: A LINEAR AND NON-LINEAR GRANGER CAUSALITY APPROACH

This paper uses linear and non-linear Granger causality methods to determine the causal relationship between defense spending and economic growth in Turkey for the period 1949-2004. The innovative feature of this paper is that it provides evidence regarding the nonlinear causal dependence between military spending and economic growth in Turkey. The empirical results contribute to the empirical literature by indicating support for both linear and non-linear causality between military expenditures and economic development and they may prove useful in theoretical and empirical research by regulators and policy makers.