Abstract:

Turkey has been of great importance considering its geopolitical location. In this respect, the optimum amount to be allocated for military expenditure among public expenditure is among the top issues to be taken into consideration in terms of government and policy makers. In this study, causal relationship between military expenditure and economic growth in Turkey for the period 1985-2019 has been analyzed by symmetric Hacker-Hatemi-J (2006) and asymmetric Hatemi-J (2012) causality tests. Within the scope of the study, it is aimed to reveal the possibility of hidden causality between variables suggested by Granger and Yoon (2002). According to the findings obtained from the analyses, there is no symmetrical causality relationship between military expenditure and economic growth. This situation supports that the hidden causality relationship can be found in the symmetric causality test. As a matter of fact, in the findings of the asymmetric causality relationship in Hatemi-J (2012), an asymmetric causality relationship is observed between the cumulative positive and negative shocks of the variables. The bidirectional asymmetric causality relationship observed between military expenditure and economic growth in the impulse response analysis of the analysis by Hatemi-J (2014) confirms the feedback hypothesis. Therefore, it is observed that there is a mutual interaction between military expenditure and economic growth

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