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The nexus of military, final consumption expenditures, total reserves, and economic development of Pakistan

Abstract:

This study investigates the effects of military expenditure, final consumption expenditure, gross national expenditure, net income, broad money, and total reserves on Pakistan’s economic growth. The nonlinear autoregressive distributed lag (NARDL) and robust regressions methods are used to examine the relationship among variables. The outcomes revealed that total reserves positively impacted the economic growth during positive and negative short- and long-run shocks. Final consumption expenditure and gross national expenditure negatively influenced the economic growth. Similarly, military expenditure and net income positively and negatively impacted the economic growth, while broad money has adverse and positive relation to economic growth. The results of the robust least squares and stepwise least squares approaches showed that all variables except military expenditure and reserves have positive impact on economic development. This study suggests that government should carefully monitor defence-related investment to maintain economic development.