Does Money Win Wars?

Jonathan Federle, Dominic Rohner and Moritz Schularick

No 19841, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The impact of economic resources on the outcomes of military conflicts is heatedly debated—yet causal empirical evidence is lacking. To address this gap, the current paper asks whether “deeper pockets†help win wars. We construct a fine-grained dataset covering more than 700 interstate disputes and rely on exogenous resource price shocks to estimate the causal effect of financial windfalls on winning chances in interstate conflicts. We find a statistically significant and quantitatively large impact of windfalls on winning odds and show that a key channel of transmission is a surge in military spending.

Keywords: Commodity; prices (search for similar items in EconPapers)
JEL-codes: D74 F51 H56 N40 Q02 (search for similar items in EconPapers)
Date: 2025-01
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