Author: Hasan Şahin, Onur Özoy
Publisher/Publication: Defence and Peace Economics
Volume/Issue: 19 (3)
DOI/ISBN: 10.1080/10242690801972154
Abstract: The author in this paper investigates the existence and nature of an arms race between Greece and Turkey, two NATO allies and regional rivals. The author uses a Markov switching approach to model the military spending of both countries as a function of their own lagged spending and the spending of the other country. The model allows for different regimes of behavior, such as competition or independence, and tests for the presence and direction of causality. The results show that there is a positive and significant relation between the military spending of Greece and Turkey, and that both countries switch between competitive and independent regimes over time. He also find that Turkey is more responsive to Greece’s spending than vice versa, and that the arms race intensified after the end of the Cold War. Finally, the author discusses the implications of these findings for the regional security and stability. Part of the econometric school of study of the post-1945 Greek-Turkish military expenditure and possible arms racing.