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Does Money Win Wars?

Author

Listed:
  • Federle, Jonathan
  • Rohner, Dominic
  • Schularick, Moritz

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.

Suggested Citation

  • Federle, Jonathan & Rohner, Dominic & Schularick, Moritz, 2025. "Does Money Win Wars?," CEPR Discussion Papers 19841, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19841
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    File URL: https://cepr.org/publications/DP19841
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    Keywords

    ;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

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