Military Spending and War

Efraim Benmelech and Joao Monteiro

No 34123, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We revisit the theory of critical deterrence—the idea that military spending may reduce the risk of conflict by increasing its expected costs. To test this theory, we assemble a new cross-national dataset combining information on armed conflicts and defense spending over a 75-year period. We find that increases in military spending have no effect on short-run conflict risk—contrary to concerns that buildups may provoke escalation—but that they do lead to a small and persistent decline in conflict over the long run. Although the effect of spending on conflict is modest, its effect on the cost of war is large: higher military spending raises the scale of battlefield casualties. The effect of military spending on conflict is more pronounced for democracies, which are less likely to use force offensively, and is concentrated in internal conflicts involving nonstate actors. The deterrent power of military spending is strongest in ethnically polarized societies—precisely where the threat of civil war is most acute. Last, using dyadic data, we find that higher military spending causes a decrease in bilateral interstate conflict, and that this effect may be larger than the one we document for intrastate conflict using panel data. Taken together, our results point to a low pass-through from the cost of war to its incidence: even sharp increases in military spending yield only modest gains in deterrence.

JEL-codes: F50 F51 H56 (search for similar items in EconPapers)
Date: 2025-08
Note: PE POL
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34123.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34123

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34123
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().