Citation

Wolde-Rufael Y. Def. Peace Econ. 2014; 27(6): 871-884.

Copyright

(Copyright © 2014, Informa - Taylor and Francis Group)

DOI

10.1080/10242694.2014.886436

PMID

unavailable

Abstract

The rising trend in income inequality has recently attracted a renewed interest in the determinants of this growing trend across many countries. This article adds to the debate by investigating the impact of defence expenditure as a possible determinant of inequality in Taiwan, a country once was considered to be a poster child of an equitable growth, but now income inequality has become one of the Taiwan's growing challenges. Applying the bounds test approach to cointegration and four long-run estimators for the period from 1976-2011, we found a long-run relationship between the various measures of inequality and defence expenditure where defence expenditure exerts a positive and a statistically significant impact on the worse income inequality in Taiwan. Further application of the lag-augmented causality test procedure also reveals a unidirectional causality running from defence expenditure to income inequality with defence expenditure causing income inequality to rise.

Language: en