EXAMINING THE IMPACT OF BUDGET DEFICIT ON DEFEND EXPENDITURES

This study examines the impact of budget deficits and the Political Stability and Absence of Terrorism on defense spending with the GMM panel regression model. Defense spending as a dependent variable, budget deficit and Political Stability and Terrorism Absence of Terrorism Index data were used as independent variables to perform this analysis. The model tested in the sample of 34 OECD countries proves that defense expenditures reduce with the increase of the budget deficit. In addition, there is another result that politically stable countries are investing more in defense