The Effects of Military Expenditures on Inflation in Turkey: A Cointegration Analysis with Structural Breaks


KARAKURT B. , ŞENTÜRK S. H. , ŞAHİNGÖZ B.

MALIYE DERGISI, no.175, pp.154-170, 2018 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: Issue: 175
  • Publication Date: 2018
  • Title of Journal : MALIYE DERGISI
  • Page Numbers: pp.154-170

Abstract

Internal and external threats to Turkey lead her to have its military expenditures at a high level. The relationship between military expenditures and macroeconomic variables has been of great interest to a number of studies. However, there is no common view about the relationship between military expenditures and the inflation. In this study, the relationship between military expenditures and the inflation in Turkey is aimed to be analysed for the period 1966-2016. The length of the study period requires considering structural breaks. Therefore, according to the results of our study that benefits from a Maki cointegration test with structural breaks and Toda-Yamamoto causality test, a unidirectional positive causality between military expenditures and the inflation has been found both in the short-and the long-run.