Authors: Bansi Sawhney; Emmanuel Anoruo; William R. DiPietro
Addresses: Merrick School of Business, Department of Finance and Economics, University of Baltimore, 1420 N. Charles Street, Baltimore, Maryland 21201, USA ' College of Business, Department of Accounting and Management Information Systems, Coppin State University, 2500 West North Avenue, Baltimore, Maryland 21216, USA ' Daemen College, 4380 Main Street, Amherst, NY 14226-3492, USA
Abstract: This paper examines the issue of convergence in military spending among NATO countries. In particular, the paper employs the sequential panel selection method (SPSM) to ascertain whether the military spending of NATO countries has converged relative to that of the USA. The results from the SPSM for both the full- and sub-periods indicate that military spending of NATO countries, with the exception of Hungary, have converged to that of the USA. The results show that the number of NATO countries whose military spending converged relative to that of the USA did not change following the collapse of the Soviet Union. The overall finding of this study contradicts the alliance theory which stipulates that alliances tend to weaken or dissolve following the elimination of the unifying threat.
Keywords: military spending; SPSM; sequential panel selection method; NATO countries; panel unit root; expenditure convergence; USA; United States; alliance theory.
International Journal of Computational Economics and Econometrics, 2016 Vol.6 No.4, pp.351 - 365
Received: 27 Feb 2015
Accepted: 24 Aug 2015
Published online: 30 Sep 2016 *