The Demand for Military Expenditure: Evidence From the Eu15 (1961–2005)

Given the discussions in recent years towards the development of a Common European Security and Defence Policy (CESDP) in the European Union (EU), it is of great importance to investigate the determinants of military expenditure in this region. This paper employs the Autoregressive Distributed Lag (ARDL) approach to cointegration to estimate a general model of aggregate defence spending for each of the 15 core EU countries over the period 1961-2005. The findings indicate that there is very little uniformity in the factors that determine each country’s demand for military expenditure, something that needs to be considered by policy makers.