Forecast of Korea Defense Expenditures based on Time Series Models
- Authors
- Park, Kyung Ok; JUNG, HYE YOUNG
- Issue Date
- Jan-2015
- Publisher
- 한국통계학회
- Keywords
- Defense expenditures; GDP; exchange rate; Consumer price index; ARIMA model; Transfer Function model
- Citation
- Communications for Statistical Applications and Methods, v.22, no.1, pp.31 - 40
- Indexed
- KCI
- Journal Title
- Communications for Statistical Applications and Methods
- Volume
- 22
- Number
- 1
- Start Page
- 31
- End Page
- 40
- URI
- https://scholarworks.bwise.kr/erica/handle/2021.sw.erica/18888
- DOI
- http://dx.doi.org/10.5351/CSAM.2015.22.1.031
- ISSN
- 22877843
- Abstract
- This study proposes a mathematical model that can forecast national defense expenditures. The ongoing European debt crisis weighs heavily on markets; consequently, government spending in many countries will be constrained. However, a forecasting model to predict military spending is acutely needed for South Korea because security threats still exist and the estimation of military spending at a reasonable level is closely related to economic growth. This study establishes two models: an Auto-Regressive Moving Average model (ARIMA) based on past military expenditures and Transfer Function model with the Gross Domestic Product (GDP), exchange rate and consumer price index as input time series. The proposed models use defense spending data as of 2012 to create defense expenditure forecasts up to 2025.
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