Arms Racing and the Costs of Arms Imports: A Stochastic Model

Abstract

The paper draws on the demand for arms imports model of Levine and Smith (1995, 1997) using stochastic processes of the birth-death type in steady state. It assumes two antagonistic regional players engaged in an armaments race satisfying their demand for military hardware through imports from the international market. The paper examines the effects that arms imports have on the military balance between the two recipient countries. It constructs a state space of possible outcomes in terms of the military balance/imbalance between the two countries involved. A new variable is introduced which tries to encapsulate the absolute difference in their respective security functions at any moment in time. This variable affects the transition from one state of affairs to the other.Arms Race, Arms Imports, Greece-Turkey,

Global Arms Trade and Oil Dependence*

“…Sandler (2000) explores collective action failures in relation to arms control and security. Kollias & Sirakoulis (2002) model the effects that arms imports have on the military balance between two antagonistic regional players. Finally, Seitz et al (2015) provide a model of trade, conflict and defence spending with an arms race and determine the magnitude of welfare gains due to reductions in the likelihood of conflict and defense spending cuts.…”

Democracies, Politics and Arms Supply: A Bilateral Trade Equation

“…The economic papers on arms trade are not very numerous, and most contributions are theoretical (Peleg, 1977;Levine and Smith, 1995;Levine and Smith, 1997;Levine and Smith, 2000). The few partial-equilibrium empirical papers mostly relate to the demand side (Pearson, 1989;Kollias and Sirakoulis, 2002;Smith and Tasiran, 2005), with only two contributions focused on the supply (Blanton, 2000;Brauer, 2000). In this paper I simultaneously take into account demand and supply side of the arms market to answer a question that relates to economics and politics: whether the internal political conditions in the exporting country influence the amount of arms supplied to third countries.…”

Financial Versus Human Resources in the Greek–turkish Arms Race 10 Years On: A Forecasting Investigation Using Artificial Neural Networks

“…Turning to Öcal (2002) the paper uses Smooth Transition Regression to trace considerable non--linearities in a system that underlines an asymmetric behaviour indicating that "Greece does not want to fall behind Turkey" as it concerns defence expenditure. Athanassiou and Kollias (2002) and Kollias and Sirakoulis (2002), tackle the effects of this issue rather than the issue itself, on foreign trade and arms imports respectively. Kollias and Paleologou (2002) seem to have reached a more straightforward conclusion based on the causality methodology developed by Hendry and Ericsson (1991) to trace bi-directional causality that reveals an arms race between Greece and Turkey.…”