Military Expenditures and Shadow Economy in the Central and Eastern Europe: is There a Link?
et | 19 juil. 2019
À propos de cet article
Publié en ligne: 19 juil. 2019
Pages: 142 - 153
DOI: https://doi.org/10.1515/ceej-2018-0016
Mots clés
© 2018 I. Fedotenkov, F. Schneider, published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.
Dependent variable: logit-transformed shadow economy, country fixed effects
| Variable | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| Mil. exp. | 0.3625*** | 0.0939*** | 0.0883** | 0.1011*** | 0.0821*** |
| (0.0495) | (0.0300) | (0.0362) | (0.0276) | (0.0309) | |
| Educ. exp. | 0.0842 | 0.0093 | 0.0085 | 0.0055 | 0.0142 |
| (0.0558) | (0.0170) | (0.0170) | (0.0167) | (0.0157) | |
| Health exp. | -0.0568 | 0.0491*** | 0.0500*** | 0.0532*** | 0.0603*** |
| (0.0440) | (0.0177) | (0.0279) | (0.0175) | (0.0200) | |
| Other exp. | 0.0176*** | 0.0078*** | 0.0089*** | 0.0083*** | 0.0099*** |
| (0.0031) | (0.0021) | (0.0031) | (0.0026) | (0.0021) | |
| GDP/cap. | -0.0541*** | -0.0541*** | -0.0545*** | -0.0510*** | |
| (0.0039) | (0.0038) | (0.0038) | (0.0047) | ||
| Unempl. | 0.0031 | 0.0023 | 0.0029 | 0.0023 | |
| (0.0023) | (0.0030) | (0.0027) | (0.0020) | ||
| Regul. qual. | -0.0018 | ||||
| (0.0028) | |||||
| Corruption | -0.0035* | ||||
| (0.0020) | |||||
| Rule of law | -0.0055** | ||||
| (0.0024) | |||||
| R2 | 0.4597 | 0.9233 | 0.9243 | 0.9280 | 0.9304 |
| N | 99 | 99 | 99 | 99 | 99 |
Change in shadow economy (% of GDP) if military expenditures double
| BGR | HRV | CZE | EST | HUN | LVA |
| 3.74% | 3.94% | 1.46% | 4.38% | 1.84% | 1.96% |
| LTU | POL | ROU | SVK | SVN | |
| 1.76% | 3.57% | 2.65% | 2.17% | 1.52% |
Correlation matrix
| Variable | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 Shadow | 1 | |||||||||
| 2 Mil. exp. | 0.1455 | 1 | ||||||||
| 3 Educ. exp. | 0.0514 | 0.1772 | 1 | |||||||
| 4 Health exp. | -0.0164 | 0.2553 | 0.4221 | 1 | ||||||
| 5 Other exp. | -0.6206 | 0.4579 | -0.8703 | -0.1552 | 1 | |||||
| 6 GDP/cap. | -0.1627 | 0.2993 | -0.0029 | 0.6090 | 0.0655 | 1 | ||||
| 7 Unempl. | -0.1837 | -0.4156 | 0.4423 | 0.1086 | 0.7671 | -0.2956 | 1 | |||
| 8 Regul. qual. | 0.1511 | 0.1765 | -0.3180 | 0.2733 | 0.2799 | 0.6061 | -0.2396 | 1 | ||
| 9 Corruption | 0.1721 | 0.2022 | -0.3747 | 0.2024 | 0.3441 | 0.4459 | -0.1448 | 0.9172 | 1 | |
| 10 Rule of law | -0.1333 | 0.2399 | -0.3796 | 0.3824 | 0.4517 | 0.6875 | -0.1013 | 0.8949 | 0.8810 | 1 |
Dependent variable: logit-transformed shadow economy, country and time-fixed effects
| Variable | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|
| Mil. exp. | 0.1509*** | 0.1085*** | 0.0967*** | 0.1041*** | 0.1007*** |
| (0.0508) | (0.0265) | (0.0337) | (0.0297) | (0.0267) | |
| Educ. exp. | 0.0327 | -0.0045 | 0.0032 | -0.0001 | -0.0131 |
| (0.0309) | (0.0195) | (0.0193) | (0.0190) | (0.0186) | |
| Health exp. | 0.0046 | 0.0345* | 0.0365* | 0.0464** | 0.0459** |
| (0.0476) | (0.0204) | (0.0212) | (0.0212) | (0.0216) | |
| Other exp. | 0.0128*** | 0.0056 | 0.0075** | -0.0072** | 0.0082*** |
| (0.0039) | (0.0025) | (0.0035) | (0.0029) | (0.0026) | |
| GDP/cap. | -0.0495*** | -0.0489*** | -0.0457*** | -0.0431*** | |
| (0.0111) | (0.0099) | (0.0094) | (0.0093) | ||
| Unempl. | 0.0031 | 0.0017 | 0.0029 | 0.0019 | |
| (0.0034) | (0.0041) | (0.0038) | (0.0034) | ||
| Regul. qual. | -0.0030 | ||||
| (0.0025) | |||||
| Corruption | -0.0049** | ||||
| (0.0021) | |||||
| Rule of law | -0.0057** | ||||
| (0.0023) | |||||
| R2 | 0.1357 | 0.4393 | 0.7376 | 0.7553 | 0.7552 |
| N | 99 | 99 | 99 | 99 | 99 |
Dependent variable: Shadow economy or its transformation
| Variable | 1 log-linear | 2 log-log | 3 linear | 4 differences | 5 lags | 6 Balt | 7 Other Shad. Ec. |
|---|---|---|---|---|---|---|---|
| Mil. exp. | 0.0763*** | 0.0829* | 1.9473** | 0.0172* | 0.0230** | 0.0917*** | 0.0324* |
| (0.0214) | (0.0430) | (0.7631) | (0.0086) | (0.0103) | (0.0120) | (0.0190) | |
| Educ. exp. | 0.0031 | 0.0525 | -0.1618 | -0.0069 | -0.0111* | ||
| (0.0136) | (0.0447) | 0.4258 | (0.0474) | (0.0063) | |||
| Health exp. | 0.0343** | 0.1425** | 0.8812* | 0.0037 | 0.0012 | -0.0032 | 0.0057 |
| (0.0148) | (0.0587) | (0.4814) | (0.0032) | (0.0050) | (0.0074) | (0.0036) | |
| Other exp. | 0.0069** | 0.1652*** | 0.0514 | 0.0009 | -0.0004 | ||
| (0.0024) | (0.0536) | (0.0569) | (0.0009) | (0.0013) | |||
| GDP/cap. | -0.0392*** | -0.7009*** | -0.5742*** | -0.0123*** | -0.0039** | 0.0018 | -0.0047** |
| (0.0067) | (0.1028) | (0.2048) | (0.0026) | (0.0018) | (0.0039) | (0.0022) | |
| Unempl. | 0.0010 | -0.0293 | 0.1165 | 0.0011 | -0.0000 | -0.0037 | 0.0006 |
| (0.0027) | (0.0241) | (0.0784) | (0.0010) | (0.0007) | (0.0024) | (0.0011) | |
| Corruption | -0.0032* | -0.0025* | -0.1229*** | -0.0010*** | -0.0003 | 0.0003 | 0.0002 |
| (0.0016) | (0.0014) | (0.0424) | (0.0035) | (0.0006) | (0.0009) | (0.0006) | |
| R2 | 0.7774 | 0.7245 | 0.6216 | 0.4858 | 0.2216 | 0.6594 | 0.3150 |
| N | 99 | 99 | 99 | 121 | 99 | 36 | 99 |
Descriptive statistics. For representational reasons, we divided GDP/cap by 1000
| Variable | Description | Data range | Arithmetic mean | Standard deviation | Min | Max |
|---|---|---|---|---|---|---|
| Dependent variable: | ||||||
| Shadow | Shadow economy, % of GDP | 2003–2015 | 20.76 | 4.94 | 10.5 | 33.0 |
| Governmentexpenditures: | ||||||
| Mil. exp. | Military expenditures, % of GDP | 2003–2015 | 1.5006 | 0.3958 | 0.7646 | 2.7002 |
| Educ. exp. | Education expenditures, % of GDP | 2004–2012 | 4.6031 | 0.7402 | 2.3413 | 5.9542 |
| Health exp. | Public health expenditures, % of GDP | 2003–2015 | 5.0435 | 0.9597 | 3.2495 | 7.0650 |
| Other exp. | Other expenditures, % of GDP | 2004–2012 | 23.2611 | 3.8529 | 16.406 | 32.0431 |
| Other variables: | ||||||
| GDP/cap. | GDP per capita in 2002 prices | 2003–2015 | 21.9410 | 4.5565 | 10.931 | 31.1378 |
| Unempl. | Unemployment rate | 2003–2015 | 10.0311 | 3.7053 | 4.3 | 19.6 |
| Regul. qual. | Regulatory quality | 2003–2015 | 77.5833 | 7.6272 | 51.5 | 93.3 |
| Corruption | Control of Corruption | 2003–2015 | 65.1288 | 9.1549 | 47.1 | 87.5 |
| Rule of law | Rule of law | 2003–2015 | 68.4068 | 11.0075 | 45.0 | 86.5 |