Military spending and the black market premium in developing countries |
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Authors: | Mohsen Bahmani-Oskooee Gour G Goswami |
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Institution: | 1. The Center for Research on International Economicsand the Department of Economics , The Universityof Wisconsin-Milwaukee;2. Department of Economics , North South University |
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Abstract: | Researchers who have been concerned with the economic implications of military spending have mostly concentrated on its impact on economic growth, corruption, real exchange rate and inflation. In this paper we investigate the impact of military spending on black market premium, an area that has not been tackled so far. After adding a measure of military spending to a well established model of black market premium form the literature, we estimate the model by pooling annual data over the 1985 – 1998 period across 61 developing countries. Results from five panel specifications provide considerable evidence that higher military spending leads to higher black market premium. |
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Keywords: | black market premium military spending developing countries |
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