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Forecasting and Analyzing the Military Expenditure of India Using Box-Jenkins ARIMA Model

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  • Deepanshu Sharma
  • Kritika Phulli

Abstract

The advancement in the field of statistical methodologies to economic data has paved its path towards the dire need for designing efficient military management policies. India is ranked as the third largest country in terms of military spender for the year 2019. Therefore, this study aims at utilizing the Box-Jenkins ARIMA model for time series forecasting of the military expenditure of India in forthcoming times. The model was generated on the SIPRI dataset of Indian military expenditure of 60 years from the year 1960 to 2019. The trend was analysed for the generation of the model that best fitted the forecasting. The study highlights the minimum AIC value and involves ADF testing (Augmented Dickey-Fuller) to transform expenditure data into stationary form for model generation. It also focused on plotting the residual error distribution for efficient forecasting. This research proposed an ARIMA (0,1,6) model for optimal forecasting of military expenditure of India with an accuracy of 95.7%. The model, thus, acts as a Moving Average (MA) model and predicts the steady-state exponential growth of 36.94% in military expenditure of India by 2024.

Suggested Citation

  • Deepanshu Sharma & Kritika Phulli, 2020. "Forecasting and Analyzing the Military Expenditure of India Using Box-Jenkins ARIMA Model," Papers 2011.06060, arXiv.org.
    • Handle: RePEc:arx:papers:2011.06060
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    References listed on IDEAS

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    3. Koutroumanidis, Theodoros & Ioannou, Konstantinos & Arabatzis, Garyfallos, 2009. "Predicting fuelwood prices in Greece with the use of ARIMA models, artificial neural networks and a hybrid ARIMA-ANN model," Energy Policy, Elsevier, vol. 37(9), pages 3627-3634, September.
    4. Robinson, P. M., 1977. "The estimation of a nonlinear moving average model," Stochastic Processes and their Applications, Elsevier, vol. 5(1), pages 81-90, February.
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