How Do Geopolitical Risks Affect Government Investment? An Empirical Investigation


BİLGİN M. H. , GÖZGÖR G. , KARABULUT G.

DEFENCE AND PEACE ECONOMICS, vol.31, no.5, pp.550-564, 2020 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 31 Issue: 5
  • Publication Date: 2020
  • Doi Number: 10.1080/10242694.2018.1513620
  • Title of Journal : DEFENCE AND PEACE ECONOMICS
  • Page Numbers: pp.550-564
  • Keywords: Government investments, geopolitical risks, compensation hypothesis, efficiency hypothesis, panel data estimation techniques, PUBLIC-INVESTMENT, POLITICAL-ECONOMY, FISCAL-POLICY, GLOBALIZATION, UNCERTAINTY, DETERMINANTS, INEQUALITY

Abstract

The paper examines the effects of geopolitical risks, measured by a new index for geopolitical risk, on general government investment (gross fixed capital formation). It uses panel data for 18 countries for the period from 1985 to 2015. Using panel fixed-effects and the corrected least squares dummy variable estimators, results indicate that geopolitical risks seem to exert a positive effect on government investment.