Financial versus human resources in the Greek‐Turkish arms race: A forecasting investigation using artificial neural networks

Abstract

This paper aims at forecasting the burden on the Greek economy resulting from the arms race against Turkey and at concentrating on the leading determinants of this burden. The military debt and the defence share of GDP are employed alternatively in order to approximate the measurement of the arms race pressure on Greece, and the method used is that of artificial neural networks. The use of a wide variety of explanatory variables in combination with the promising results derived, suggest that the impact on the Greek economy resulting from this arms race is determined, to a large, extent, by demographic factors which strongly favour the Turkish side. Prediction on both miltary debt and defence expenditure exhibited highly satisfactory accuracy, while the estimation of input significance, indicates that variables describing the Turkish side are often dominant over the corresponding Greek ones.

Key Words:

• Greek military debt
• defence expenditure
• neural networks

Jel Codes:

• C45
• H56

Notes

Corresponding author. Tel.: [phone], Fax: [phone], e‐mail: aandreou @ceid.upatras.gr.

We are indebted to Professor Keith Hartley and two anonymous refeTees for their helpful comments. Thanks are also due to Mr. John S. Koufakis, for his valuable assistance concerning the collection of the data series used. The views presented in this paper are strictly personal.

Tel.: [phone], Fax: [phone], e‐mail: [email protected]