An analytical approach on defense expenditure and economic growth: The case of Turkey and Greece

The objective of this study is to examine the relationship between defense expenditure and economic growth for Turkey and Greece in the period of 1956‐2003 using yearly data.

The Engle‐Granger cointegration methodology and Granger causality test are used.

It is found that these two variables are cointegrated for both countries studied. Unidirectional causality running from economic growth to defense expenditure is only found for Turkey.

The paper ınvestigates the long‐run relationship between defense expenditure and economic growth by conducting cointegration and causality tests in the context of Turkey and Greece over the period 1956‐2003.