'Fast Transients' and the Hurst Exponent: Evidence from the US and UK Militaries

Abstract

Employing a measurement known as the “Hurst exponent,” I show that the armed services of the two major English-speaking powers displayed a strong tendency towards “persistence”: that is, a tendency for each year’s budget to replicate the previous year’s. The reason for the persistence, I conjecture, is due to the existential nature of national security threats; however, many observers have speculated that defense overspending led to the fall of the former Soviet Union, indicating that sinking resources into nonproductive uses can also be an existential threat. In the case of the United Kingdom’s military, the Army’s “Hurst exponent” largely mirrors that of its American counterpart’s—but unlike the American naval service, whose exponent is much like that of its sister services, the Royal Navy’s is nearly as high as it is possible to be. This result indicates the importance the United Kingdom placed upon its navy, but also may suggest that the nation may have contributed too large a share of the national store to its maintenance, perhaps contributing the United Kingdom’s decline relative to the rest of the globe during the 20th century.