Does Geopolitical Risks Predict Stock Returns and Volatility of Leading Defense Companies? Evidence from a Nonparametric Approach

Abstract

We use the k-th-order nonparametric causality test at monthly frequency over the period of 1985:1 to 2016:06 to analyze whether geopolitical risks can predict movements in stock returns and volatility of 24 global defense firms. The nonparametric approach controls for the existing misspecification of a linear framework of causality, and hence, the mild evidence of causality obtained under the standard Granger tests cannot be relied upon. When we apply the nonparametric test, we find that there is no evidence of predictability of stock returns of these defense companies emanating from the geopolitical risk measure. However, the geopolitical risk index does predict realized volatility in 50% of the companies. Our results indicate that while global geopolitical events over a period of time is less likely to predict returns, such global risks are more inclined in affecting future risk profile of defense firms.     

ESCAPE FROM NUCLEAR DETERRENCE

Since the post-World War II genesis of nuclear deterrence, two presidential initiatives have been presented to deliver humanity from the threat of its failure. The first was the Strategic Defense Initiative (SDI), a constellation of space- and ground-based systems that President Ronald Reagan envisioned would render nuclear weapons “impotent and obsolete.” The second is President Barack Obama's roadmap to “a world without nuclear weapons,” commonly referred to as “Global Zero.” While these proposals appear to have little in common, deeper investigation reveals a number of provocative similarities in motivation and presentation. Moreover, both generated fierce debate, often with ideological overtones, about their strategic desirability and technical feasibility. We use these parallels, as well as prominent dissimilarities, to draw lessons from the SDI experience that can be applied to the debate over Global Zero.     

The long and winding road … to success? Unit peace operation effectiveness and its effect on mission success

Why does peacekeeping sometimes fail? How can effective peacekeepers increase the likelihood of success of a mission? The two main flaws in the current evaluations of peace operations are that they mainly rely on already concluded missions and that they make use of indicators that do not reveal micro-level dynamics. This article introduces an analytical framework relating the effectiveness of soldiers to their actual impact in their area of operation in a peace operation. The framework is called “unit peace operation effectiveness” (UPOE). Focusing on soldiers in peace operations, this article shows that: different units behave differently; emphasize different aspects of the mandate; and are effective in different ways. Ultimately, this has an actual impact on the end-state of the mission. It relies on and adapts classic security studies works to theoretically enrich the peacekeeping literature. The model is tested in an illustrative case study based on ethnographic work on French and Italian units in Afghanistan between 2008 and 2010.     

基于奇异值分解的潜艇磁场推算

针对潜艇磁性防护,基于磁偶极子阵列模型,建立了潜艇磁性目标高精度磁场计算模型。提出了利用奇异值分解的方法对模型进行求解,利用该求解算法进行了模型计算与实测数据比对,结果表明,该计算方法能够有效适用于计算高精度潜艇磁场。基于奇异分解的方法计算了潜艇高空磁场,计算结果可供潜艇防护磁性探测参考。     

基于多Agent的网络防御建模与仿真

为了提高网络防御建模的有效性,本文提出了应用多Agent对网络防御进行建模的方法。并且分析了多Agent的建模仿真流程,通过多Agent建模仿真方法,建立了分布式拒绝服务攻击的防御模型。最后,用Netlogo软件进行了仿真实验,通过仿真结果验证了防御模型的有效性。     

The practice and theory of British counterinsurgency: the histories of the atrocities at the Palestinian villages of al-Bassa and Halhul, 1938–1939

This article details two largely unreported atrocities by British forces operating against Arab rebels during the Arab revolt, 1936–9, at the Palestinian villages of al-Bassa and Halhul. It then examines the military-legal system that underpinned and authorised British military forces operating in aid of the civil power, suggesting that the law in place at the time allowed for a level of reprisals and punitive actions, such as happened at al-Bassa and Halhul. The article does not conclude that the law allowed for atrocities but it does argue that it gave a basic form and understanding to an operational method that was brutal and could lead to atrocities. It thus tests the idea in much of the literature on counterinsurgency that the British were restrained and used minimum force when compared to other colonial and neo-colonial powers fighting insurgents.     

防空兵网络化作战指挥控制方式

信息化条件下防空兵作战依托防空兵指挥信息系统,已经将防空兵各个作战要素联结到了一起,初步具备了网络化作战的雏形.而恰当的指挥控制方式是实施高效防空兵网络化作战的关键问题之一.首先剖析了防空兵网络化作战给指挥控制带来的新特点,而后构建了防空兵网络化作战指挥控制方式的概念模型,在此基础上提出了适应防空兵网络化作战的指挥控制方式是自适应指挥控制方式.并研究了防空兵网络化作战实施自适应指挥控制方式的必要性、可行性、内在机理以及实现的途径.     

Army reconstruction in the Democratic Republic of the Congo 2003–2009

Since the peace agreements of 2002–2003 which ended the second war in the Democratic Republic of Congo, reconstruction of the army has been an inherently political process, in common with other attempts to carry out security sector reform (SSR). This article briefly sketches out the Congolese army's history, then attempts to fill a gap in the literature on Congolese SSR by detailing what can be found of the actual structure and shape of the present army. The efforts that have been made to reform the army are then examined, followed by a conclusion which examines the major issues and possible ways forward.     

Why did Sudan Lose a small war in Southern Sudan?

ABSTRACT

When on the wrong end of an asymmetry in the projection of hard power, weaker sides countenance the grim arithmetic of avoiding direct and massed confrontations. Invariably, insurgents have over the ages tended to employ indirect tactical methods to render their stronger opponents ineffective. Ultimately – interest asymmetry, regime type, asymmetries of strategy, and external intervention – combine in a complex interplay and pattern, to militate against a strong side. In Sudan, these factors interacted throughout the civil wars to produce regional autonomy and finally an independent South Sudan in 2011. Similar strategic logic had confronted many large African states battling insurgencies in Ethiopia, Angola, Nigeria, Zaire, and apartheid-era South Africa. Oftentimes, weakening public resolve has caused these governments to accommodate, capitulate or withdraw even if they try not to blink. Notwithstanding the regime type, it can be concluded that the majority of strong actors are prone to fail in a protracted, asymmetric conflict. Hence, the notion of linking victory in counterinsurgency to the degree of openness (democratic polyarchies); or closeness (totalitarianism) – is still valid but highly contestable in the case of Africa’s large dysfunctional states.     

Explaining the impact of militancy on Iran–Pakistan relations

ABSTRACT

Sectarian militants have for years launched attacks from Pakistan across the border to Iran. Finding sanctuary in a neighbouring country can make the difference between success and failure for militants. Conventional wisdom holds that a lasting transnational militancy challenge would typically create serious interstate conflict. Militancy has triggered armed encounters between Iran and Pakistan. This article argues that despite some tension militancy has resulted in deeper cooperation in the ambivalent dyad. Both states’ overarching security concerns, having exhausted other options, the believed involvement of third-party states, and economic potential, have moderately alleviated negative pressure caused by militancy.