An Empirical Investigation of External Debt-Military Expenditure Nexus in Pakistan

Authors

  • Saima Sadiq MPhil Scholar, Hazara University, Mansehra.
  • Misbah Nosheen Associate professor, Department of Economics, Hazara University, Mansehra & Post Doc. Research Fellow, University of Nebraska Omaha USA.
  • Sadia Naz Teacher Assistant, Hazara University, Mansehra

Keywords:

Pakistan, military spending, external debt, short-term, long-term

Abstract

The correlation between military expenditure and external debt is a significant concern, and this research investigates the connection between Pakistan's military spending and its external debt from 1972 to 2021. By using the ARDL model, both short-term and long-term associations were determined. The results indicate that a one percent increase in defense spending leads to a 6.81% increase in Pakistan's external debt. This study suggests that emerging countries such as Pakistan should reduce their military spending and enhance real GDP to stabilize inflation. Furthermore, governments should establish self-reliance in their own domestic defense sector to reduce their dependence on foreign loans and import spending.

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Published

01-06-2023

How to Cite

Sadiq, S., Nosheen, M., & Naz, S. (2023). An Empirical Investigation of External Debt-Military Expenditure Nexus in Pakistan. Journal of Contemporary Macroeconomic Issues, 4(1), 43–56. Retrieved from https://ojs.scekr.org/index.php/jcmi/article/view/97

Issue

Vol. 4 No. 1 (2023): Vol, 4: Issue, 1 (June, 2023)

Section

Articles