Estimating the Nonlinear Demand for Defense Burden and its Income Elasticity in Iran According to the Level of International Threats

Document Type : Research Paper

Authors

1 lorestan

2 lorestan university

Abstract

This paper investigates the nonlinear demand for defense burden function and its income elasticity in Iran for the period of 1991 to 2015 using Smooth Transition Regression (STR) model. For this end, the Average defense burden in Middle Eastern countries is used as the international threats indicator (inverse security index) and transition variable. Moreover, considering one transition function with one threshold parameter, that represents a two-regime model, is sufficient to specification of nonlinear relationship among variables. The results indicate that the threshold value is 8.28 percent and the estimated slope parameter is 1.88. In the first regime, the income elasticity of defense burden is negative and with a one percent increase in income, the defense burden is reduced by about 0.05%. In the second regime, the income elasticity of defense burden is positive and with a one percent increase in income, the defense burden increases by about 0.03%. Therefore, there is a U-inverse relationship between income and defense burden in Iran, according to the level of security. According to other results, the coefficients of the impact of non-defense expenditure, population, international threats and oil revenues in the first limiting regimen are negative, meaningless, positive and positive. But in the second limiting regime where the level of international threats is higher than the threshold, the severity of this effect (without changing the sign) increases.

Keywords

References

 
-     بیضایی، ابراهیم. (1380). رابطه‌ بین مخارج نظامی و برخی متغیرهای اقتصادی در ایران 1376-1351. فصلنامه علوم انسانی دانشگاه الزهرا، شماره 37 و 38: 47-75.
-     جعفری ‌صمیمی، احمد؛ منتظری شورکچالی، جلال و تاتار، موسی.(1392). امید به زندگی و رشد اقتصادی در ایران، مدل رگرسیون انتقال ملایم. فصلنامه رشد و توسعه اقتصادی، شماره 13: 128-117.
-     حسنی صدر آبادی، محمدحسین و عزیزنژاد، صمد. (1386). هزینه‌های دفاعی و تأثیر آن بر رشد اقتصادی (مدل عرضه و تقاضای کل برای ایران). فصلنامه پژوهشهای اقتصادی ایران، سال نهم، شماره 30: 212-193.
-     گل‌خندان، ابوالقاسم. (1393). بررسی و مقایسه تطبیقی تأثیر هزینه‌های نظامی بر رشد اقتصادی کشورهای درحال‌توسعه و توسعه‌یافته منتخب. فصلنامه تحقیقات توسعه اقتصادی، شماره 15 :23-44.
-     گل‌خندان، ابوالقاسم. (1394). تعیین سطح بهینه‌ بخش دفاعی در ایران از منظر اقتصادی. فصلنامه مدیریت نظامی، شماره 60: 212-176.
-     گل‌خندان، ابوالقاسم. (1395). برآورد تابع تقاضای مخارج دفاعی در ایران. فصلنامه علوم و فنون نظامی، شماره 36: 55-29.
-     گل‌خندان، ابوالقاسم. (1396الف). تحلیل اقتصادسنجی فضایی از رقابت تسلیحاتی در کشورهای حوزه‌ خلیج فارس. فصلنامه علوم و فنون نظامی، شماره 39: 27-5.
-     گل‌خندان، ابوالقاسم. (1396ب). تحلیل پویای رابطه منابع طبیعی و نظامی‌گری در کشورهای خاورمیانه. فصلنامه مطالعات راهبردی سیاستگذاری عمومی، شماره 22: 37-19.
-   گل‌خندان، ابوالقاسم. (1396ج). سنجش وابستگی متقابل دفاع بین کشورهای منطقه خاورمیانه. فصلنامه مطالعات خاورمیانه، شماره: 114-85.
-     گل‌خندان، ابوالقاسم؛ خوانساری، مجتبی و گل‌خندان، داود. (1394). نظامی‌گری و رشد اقتصادی: شواهدی تجربی از کشورهای منطقه منا در قالب الگوی پانل‌پویا. فصلنامه رشد و توسعه اقتصادی، شماره 18: 50-31.
-     محمدیان منصور، صاحبه و گل‌خندان، ابوالقاسم. (1394). اثر هزینه‌های نظامی بر بدهی‌های خارجی ایران. فصلنامه اقتصاد مالی، شماره 32 : 168-139.
-      مولایی، محمد و تاجعلی، الهام. (1394). بررسی و مقایسه اثر مخارج نظامی و غیر نظامی بر رشد اقتصادی ایران. فصلنامه راهبرد اقتصادی، شماره 14: 124-95.
-      Abdelfattah, Y. M., Abu-Qarn, A. S., Dunne, J. P., & Zaher, S. (2014). The demand for military spending in Egypt. Defence and Peace Economics, 25(3), 231-245.
-      Ali, H. E., & Abdellatif, O. A. (2015). Military expenditures and natural resources: evidence from rentier states in the Middle East and North Africa. Defence and Peace Economics, 26(1), 5-13.
-      Al-Mawali, N. (2015). Do natural resources of rentier states promote military expenditures? evidence from GCC Countries. Journal of Economic & Financial Studies, 3(3), 49-53.
-      Antonakis, N. (1997). Military expenditure and economic growth in Greece, 1960-90. Journal of Peace Research, 34(1), 89-100.
-      Beyzaei, E. (2001). The relationship between military spending and economic variables in Iran (1972-1997). Journal of Humanities of Al-Zahra University, 37 & 38: 47-75 (in persian).
-      Brauner,  J. (2015). Military spending and democracy. Defense and Peace Economics, 26(4), 409-423.
-      Douch, M. & Solomon, B. (2013). Middle powers and the demand for military expenditures. Defense and Peace Economics, 25(6), 605-618.
-      Dunne, P. (1995). Economic effects of military expenditure in development countries: a survey, the peace of dividend. Ch. 23, 439-464.
-      Dunne, P., & Nikolaidou, E. (2001). Military expenditure and economic growth: A demand and supply model for Greece, 1960–96. Defence and Peace Economics, 12(1), 47-67.
-      Dunne, P., & Perlo-Freeman, S. (2003). The demand for military spending in developing countries. International Review of Applied Economics, 17(1), 23-48.
-      Fonfria,  A., & Marin, R. (2012). Determinants of the demand for defense expenditure in the NATO countries. Journal of the Higher School of National Defense Studies, 9-22.
-      George, J., Hou, D., & Sandler, T. (2018). Asia-Pacific demand for military expenditure: spatial panel and SUR estimates. Defence and Peace Economics, 1-21.
-      Golkhandan, A. (2014). A comparative study of the impact of military expenditure on economic growth in the selected developing and developed countries: A system GMM approach. Economic Development Research, 4(15), 23-44 (in Persian).
-      Golkhandan, A. (2015). The determination of the optimal level of defense sector in Iran from economic perspective. Military Management Quarterly, 15(60), 176-212 (in Persian).
-      Golkhandan, A. (2016). Estimating the function of demand for defensive expenditures in Iran. Quarterly Journal of Military Science and Tactics, 12(36), 29-55 (in Persian).
-      Golkhandan, A. (2017a). Spatial Econometric Analysis of the Arms Race between and among the Persian Gulf States. Quarterly Journal of Military Science and Tactics, 13(39), 5-27 (in Persian).
-      Golkhandan, A. (2017b). Dynamic analysis of the relationship between natural resources and militarism in the Middle East countries. Journal of Strategic Studies in Public Policy, 7(22), 19-37 (in Persian).
-      Golkhandan, A. (2017c). Measure the interdependence of defense between Middle Eastern countries. Middle East Studies Quarterly, No. 1, 85-114 (in Persian).
-      Golkhandan, A., Khansari, M. & Golkhandan, D. (2015). Militarism and economic growth: empirical evidence from the MENA region countries using dynamic panel model. Quarterly Journal of Economic Growth and Development Research, No. 18, 31-50 (in Persian).
-      Guesnet, L. (2013). Oil, conflict and military expenditure: The Chad example. In Proceedings of the 2013 Annual International Conference on Economics and Security SIPRI, Stockholm, Sweden (Vol. 1415, p. 120).
-      Gupta, S., De Mello, L., & Sharan, R. (2001). Corruption and military spending. European Journal of Political Economy, 17(4), 749-777.‏
-      Hasani Sadrabady, M. H. & Aziznezhad, S. (2007). Defense spending and its impact on economic growth (aggregate demand and aggregate supply model for Iran). Journal of Iranian Economic Research, 30, 193-212 (in Persian).
-      Jafari Samimi, A., Montazeri Shoorekchali, J. & Tatar, M. (2013). Life expectancy and economic growth in Iran: Smooth Transition Regression (STR) Approach. Quarterly Journal of Economic Growth and Development Research, 13, 117-128 (in Persian).
-      Maizels, A. & Nissanke, M. (1986). The determinants of military expenditure in developing countries. World Development, 14(9), 1125-40.
-      Malizard, J., & Droff, J. (2014). Economic versus strategic constraints: the asymmetric behavior of defense spending in France (No. hal-01018780).
-      Mohammadian Mansoor, S. & Golkhandan, A. (2015). The effect of military expenses on Iran’s external debt. Financial Economics Quarterly, 32, 139-168 (in Persian).
-      Mowlaei, M. & Tajali, E. (2015). Investigating and comparing the effect of military and non-military expenditures on economic growth in Iran. Journal of Economic Strategy, 4, 95-124 (in Persian).
-      Murdoch, J. C., & Sandler, T. (2002). Economic growth, civil wars, and spatial spillovers. Journal of Conflict Resolution, 46(1), 91-110.
-      Nikolaidou, E. (2008). The demand for military expenditure: Evidence from the EU15 (1961–2005). Defense and Peace Economics, 19(4), 273-292.
-      Perlo-Freeman, S. & Brauner, J. (2012). Natural resources and military expenditure: the case of Algeria. The Economics of Peace and Security Journal, 7(1), 15-21.
-      Rosh, R. M. (1988). Third world militarization: security webs and the states they ensnare. Journal of Conflict Resolution, 32(4), 671-698.
-      Sandler, T., & Hartley, K. (1995). The economics of defense. Cambridge University Press.
-      Sezgin, S. & Yildirim, J. (2002). Democracy and military expenditure: a cross-country evidence. Transition Studies Review, 12(1), 93-100.
-      Skogstad, K. (2016). Defense budgets in the post-Cold War era: a spatial econometrics approach. Defense and Peace Economics, 27(3), 323-352.
-      Solomon, B. (2005). The demand for Canadian defense expenditures. Defense and Peace Economics, 16(3), 171-189.
-      Terasvirta, T. (2004). Smooth transition regression modeling. in H. L¨utkepohl and M. Kratzig (Eds), Applied Time Series Econometrics, Cambridge University Press, Cambridge, 17, 507-552.
-      Van Dijk, D. (1999). Smooth transition models: extensions and outlier robust inference (No. 200).
-      Yesilyurt, M. E., & Elhorst, J. P. (2017). Impacts of neighboring countries on military expenditures: A dynamic spatial panel approach. Journal of Peace Research, 54(6), 777-790.

Files

Share

How to cite

Statistics