A VAR model applies when each variable in the system does not only depend on its own lags, but also the lags of other variables. It is a natural extension of the univariate autoregressive model to dynamic multivariate time series. The VAR model has proven to be especially useful for describing the dynamic behavior of economic and financial time series and for forecasting.
Published in Chapter:
Political Economy of Growth Effects of Defense Expenditure in Nigeria
Ezebuilo R. Ukwueze (University of Nigeria Nsukka, Nigeria), Chinasa E. Urama (University of Nigeria Nsukka, Nigeria), Henry T. Asogwa (University of Nigeria Nsukka, Nigeria), and Oliver E. Ogbonna (University of Nigeria Nsukka, Nigeria)
Copyright: © 2018
|Pages: 24
DOI: 10.4018/978-1-5225-4778-5.ch021
Abstract
National security is as important as the existence of a nation. Nigeria has witnessed consistent rise in defense expenditure, with attendant opportunity costs. Internal threats have contributed immensely to the rise in defense expenditure as proliferation of arms and uprising of different ethno-rival groups and incipient militancy and insurgency have created insecurity in the country. Similar pressure and general insecurity has been intensified by increasing spate of kidnapping, politically motivated killings, ethno-religious uprisings, and terrorist web-like war by the Boko Haram sect. It is expedient to investigate the political motivation behind the military expenditure rise. This study is poised to estimate the politico-economic determinants of military expenditure in Nigeria using unrestricted VAR model for estimation. The data were sourced from World Bank's WDI, ICRG data, transparency international and SIPRI data, using Stata 13 software. The results show that ethnic violence, index of corruption, quality of governance, population growth, freedom from corruption affect military expenditure. The authors recommend that improved quality of governance will reduce corruption, ethnic violence, and improve welfare.