Trade Costs, Conflicts, and Defense Spending
- Publisher: Sonderforschungsbereich/Transregio 15 Governance and the Efficiency of Economic Systems München
B7 - Globalisierung und der Anstieg der Vorstandsbezüge | F51 | Munich Discussion Papers in Economics | H56 | defense spending | Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems | F13 | gains from trade | C5 | general equilibrium; gains from trade; defense spending | C6 | general equilibrium | Volkswirtschaft
This paper develops a quantitative model of trade, military conflicts, and defense spending. Trade liberalization 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 de...