Arms Race Between Turkey and Greece: Time-Varying Causality Analysis

Abstract

An arms race is the dynamic process followed by states in the acquisition of weapons. An armsrace requires mutual military expenditures during this process to support the arms race hypothesisamong states. This study elaborated on the arms race hypothesis between Turkey and Greece for theperiod 1960-2016 with the help of time-varying causality testing as well as bootstrap causality testingand asymmetric causality testing. The bootstrap causality test results proved that there is aunidirectional causality relation between Greece’s defense expenditures and Turkey’s defenseexpenditures, whereas the asymmetric causality testing results proved that a mutual relationship existsbetween the two states’ defense expenditures. Further, according to the time-varying causality testingresults, the presence of an arms race can be confirmed between the two countries for the periods 1975-1990 and 2000-2014.