EconPapers    
Economics at your fingertips  
 

Make Trade not War?

Philippe Martin (), Thierry Mayer () and Mathias Thoenig ()

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper analyses theoretically and empirically the relationship between military conflicts and trade. We show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial, military conflicts reduce trade, and leaders are rational. When war can occur because of the presence of asymmetric information, the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains. However, countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict. We test our predictions on a large data set of military conflicts on the 1950-2000 period. Using different strategies to solve the endogeneity issues, including instrumental variables, we find robust evidence for the contrasting effects of bilateral and multilateral trade openness. For proximate countries, we find that trade has had a surprisingly large effect on their probability of military conflict.

Keywords: commerce (search for similar items in EconPapers)
Date: 2008-07
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00293018
References: Add references at CitEc
Citations: View citations in EconPapers (90) Track citations by RSS feed

Published in Review of Economic Studies, Oxford University Press (OUP), 2008, 75 (3), pp.865-900. ⟨10.1111/j.1467-937X.2008.00492.x⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Make Trade Not War? (2008) Downloads
Working Paper: Make trade not war ? (2005) Downloads
Working Paper: Make Trade not War? (2005) Downloads
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:hal:cesptp:hal-00293018

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2019-12-03
Handle: RePEc:hal:cesptp:hal-00293018