2017

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Defense expenditure and its impact on Inflation
(UMT, Lahore, 2017) Syed Sanwal Kaleem
This paper focuses on the impact of defense expenditure on inflation in case of the three neighboring countries namely Pakistan, India and Bangladesh. Although defense expenditure is a variable strongly associated with all the three countries, not much studies have been carried out regarding its impact on inflation. The purpose of this study is to find out whether defense expenditure has more impact on inflation with a focus on comparison between the three countries, or does other social economic variables like growth and exchange rate have more impact on inflation. This is found through empirical estimations using ARDL approach as well as Granger Causality Tests. The results show that only in case of Bangladesh, defense expenditure does cause inflation while in case of Pakistan and India, more focus should be done on the social economic variables.