PRICES AND QUANTITIES IN THE ARMS TRADE

There are two main sources of information about the Arms Trade, SIPRI and ACDA. These two sources give very different pictures of the evolut ion of the market, primarily because their measures are designed to ca pture conceptually different features. Although they are both expresse d in constant dollars, the SIPRI series is designed to be a volume ind ex of physical transfers, the ACDA series a constant price value index . Thus in principle, the ratio of the ACDA to SIPRI series should prov ide an implicit price index of arms; though in practice there are many measurement problems. In this paper, we discuss the basis of these in dices and show that the ratio, the implicit price, not only looks plau sible in the light of the evolution of the market, but has a significa nt negative effect on the demand for arms imports in an econometric eq uation.