Symmetric and Asymmetric Effect of Oil Price Shocks on Defense and Security Expenditures in Oil-Land Islamic Countries

Oil revenues play an important role in most oil-exporting Islamic countries and are considered as the main source of funding for all kinds of government expenditures in these countries. Therefore, oil price shocks can have a great impact on the defense and security expenditures of oil-land Islamic countries. Based on this, the main purpose of this research is to investigate the symmetric and asymmetric impact of oil price shocks on defense and security expenditures in 16 oil-land Islamic countries during the years 2000-2021. For this purpose, a symmetric model and an asymmetric model have been used in the form of regression models and panel data analysis method. The estimation results of the symmetrical model show that a one percent increase (decrease) in crude oil price increases (decrease) the defense and security expenditures in the studied countries by about 0.1 percent in the long run. The estimation of the asymmetric model also shows that in the long run, the effect of increasing oil price shocks on defense and security expenditures is positive, and this effect is negative for decreasing shocks; but the impact of positive shocks is greater than negative shocks (asymmetric effect). Therefore, reducing the dependence on oil revenues in order to provide defense and security expenses in oil-land Islamic countries, in order not to affect the security of these countries from oil price fluctuations is the most important policy recommendation of this research.