Causality between Defense Spending GDP and Economic Growth

This paper addresses whether or not the government members of the “Coalition of the Willing” military expenditure as a participant in the war in Iraq will help to generate domestic economic growth on the eve of an impending recession. This paper analyzes the findings during the time period 1989-2006 regarding military expenditure as a percentage of GDP, and its effect on GDP growth, through comparing that relationship between studies and in different political, socioeconomic circumstances. It also performs the same tests on the most recent and complete set of data available for the 31 member nations of the Coalition, to see the result of past spending activities and whether or not there is a causal relationship. The paper concludes that there is no Granger-causality between military expenditure as a percentage of GDP and economic growth in any of 24 the countries for which regression analysis could be performed