| Summary: | 碩士 === 雲林科技大學 === 財務金融系碩士班 === 96 === This study investigates the relationship between the national defense expenditure and the macroeconomic factors including the economic growth rate, exchange rate, unemployment rate and the price index in Taiwan. Empirically, I suggest that both the endogenous relationship and the non-stationary property should be controlled. Given the fact that national defense expenditure and other macroeconomic factors are unit-root processes and with endogenous problem, I adopt the vector autoregression (VAR) to examine the hypotheses. As a result, the national defense expenditure and the macroeconomic factors are co-integrated, and the increase in the national defense expenditure causes the increase in economic growth and GDP. The results imply that the government determines the investment on national defense by the political factors more than the macroeconomic factors. In terms of the policy implication, this research suggests that government should (1) consider the reasonable level of the national defense expenditure, (2) improve the efficiency of the national defense under the limited resource, and (3) establish the civil national defense concept that gets more supports of civilian.
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