Authors
Publication Date
JEL Classification
D74
F51
H56
N40
Q02
Key Words
Related Topics
Geoeconomics
International Trade
Fiscal Policy & National Budgets
Economic resources are often seen as decisive for the outcomes of military conflicts. This 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 windfall gains on winning chances in interstate conflicts. We find a statistically significant and quantitatively large impact of windfall gains on winning odds and show that a key channel of transmission is a surge in military spending, after an exogenous increase in government revenues.
