The Effect Of Healthcare Expenditure, Trade Openness And Military Expenditure On Economic Growth
In this paper we address the effect of military expenditures, healthcare expenditures as well as the effect of trade openness and political instability on economic growth for NATO countries applying panel approaches. The results show that the military expenditure has a negative impact on the economic growth. However, healthcare expenditure and trade openness have a positive effect on the economic growth for NATO countries. However, there is no statistically significant effect for political instability on economic growth. Furthermore we apply a novel non-linear panel GMM approach ofSeo and Shin (2016) which allows for a threshold effect with endogenous regressors and threshold variables. The results from Seo and Shin (2016) method shows that the optimal threshold level for healthcare spending is 0.0114%.
Keywords - NATO, Panel methods, System GMM, Endogenous threshold effects and regressors.