Trade costs, conflicts, and defense spending

• 成果类型: Article
• 署名作者: Seitz, Michael; Tarasov, Alexander; Zakharenko, Roman
• 署名单位: University of Munich; HSE University (National Research University Higher School of Economics)
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2014.11.013
• 发表日期: 2015
• 页码: 305-318
• 关键词: General equilibrium; gains from trade; Defense spending

摘要

This paper develops a quantitative model of trade, military conflicts, and defense spending. Lowering trade costs between two countries reduces probability of an armed conflict between them, causing both to cut defense spending. This in turn causes a domino effect on defense spending by other countries. As a result, both countries and the rest of the world are better off. We estimate the model using data on trade, conflicts, and military spending. We find that, after reduction of costs of trade between a pair of hostile countries, the welfare effect of worldwide defense spending cuts is comparable in magnitude to the direct welfare gains from trade. (C) 2014 Elsevier B.V. All rights reserved.