Evidence of asymmetric cointegration between the military expenditures of India and Pakistan

An important issue in defense economic literature has long been the modeling the arms race between rival countries. However, although various specifications with different data sets have been employed, little has been found in favor of a clear-cut arms race between the rivalries. Brauer (2002) and Dunne, Nikolaidu, and Smith (2005) provide excellent literature survey regarding the advantages and disadvantages of various specifications in modeling the arms race and/or data measurement issues leading to poor results, particularly in the case of Turkey and Greece. The possible arms race between India and Pakistan has also been a topic of interest for many researchers as the two have maintained a hostile relationship with one another since their creation as separate states in 1947. The religious differences between the two countries are believed to be the main reason of the partition and ongoing hostility, which led to an arms race (Tibbett & Akram-Lodhi, 1997; Deger & Sen, 1990; Alexander, 1987; Ganguly, 1995).