The relation between growth, energy imports, militarization and current account balance in China, Israel and South Korea

Abstract

This paper tested the relation among macroeconomic variables such as economic growth, current ac-count balance, energy imports and non-economic variable as militarization for the selected countries by employing Markov Switching-Bayesian Vector Auto Regressive approach for China, Israel and South Korea. These countries have high rate of export and import of weapons, the current account surplus, and higher rate of energy imports. The results showed that the relation between the selected variables differs in these countries with respect to their energy and weapon import levels. According to Markov-Switching Bayesian Granger Causality results, if the governments determine the polices in the context of the results of the traditional causality test, it will be impossible to obtain the estimated impacts from the policies. Results determined that Militarization, energy imports, economic growth and current ac-count balance relate to each other for all countries. Energy imports increase in the effect of militarization races and economic growth. The current account of the selected countries are vulnerable to the negative energy shocks and militarization.(c) 2021 Elsevier Ltd. All rights reserved.