Is there a Greek-Turkish arms race? Some further empirical results from causality tests

The Greek-Turkish rivalry has attracted considerable attention in the defence economics literature. Given the tense bilateral relations between the two countries, a number of studies have addressed the issue of a Greek-Turkish arms race. The empirical results that have been reported vary depending on the methodology used and time period covered. Unidirectional, bi-directional as well as no causality between Greek and Turkish military expenditures have been reported. This paper contributes to the Greek-Turkish arms race literature using the causality methodology employed by Hendry and Ericsson (1991) and Davidson et al. (1978). The time period covered is 1950-1999 and the results reported here appear to suggest the presence of bi-directional causality and therefore an armaments race between Greece and Turkey.