Measuring Volatility

Abstract

AbstractThis chapter presents a new measure of volatility: the residuals of a Box-Jenkins procedure applied to the time series of states’ behaviors toward their counterpart. It explains why this measure can systematically capture volatility over time and space. Measurements of volatility (such as standard deviation and relative change) are inadequate to accurately distinguish volatile change in states’ behaviors from other forms of change. The chapter then compares volatility in the behaviors of countries such as India, Cuba, Pakistan, Iran, Japan, and South Korea toward both allies and rivals. The chapter demonstrates that volatility cannot be reduced to other forms of change in states’ behaviors; that it greatly varies across time and cases; and that, by abandoning useful but at times too-strict dichotomizations such as those suggested in the concepts of “alliances” and “rivalries,” the concept and measurement of volatility provide a richer, more satisfying understanding of the international arena.