Debt - Defense Relationship in South Asian Economies

Abstract

This study examines the debt-defense association in South Asian economies, for the panel data of six South Asian Economies: Pakistan, Bangladesh, Sri Lanka, Nepal, India and Afghanistan over the time period 1990 to 2013. Using panel data technique of co-integration and sequentially Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators, this study finds that the military expenditure has negative relationship with external debt in this region.