Research

Military outcomes depend not only on initial military strength but also on the capacity to expand it during war. We develop a model in which industrial capacity can have a strategic role as a military deterrent and use it to study how governments can sustain peace at the lowest cost. When wars end before wartime production can affect military outcomes, peacetime procurement suffices. When wars can be long, efficient deterrence also requires subsidies to industrial capacity because private investors do not internalize its strategic value as a military deterrent. Optimal policy gives larger subsidies to technologies that can expand output more readily during war. We develop an Integrated Defense Economics Model to quantify the gains from subsidies and identify priority sectors. Relative to a procurement-only benchmark, subsidies raise steady-state welfare and reduce military expenditure while maintaining deterrence. Priority sectors include guided missiles, propulsion units, and ammunition, and the model shows how these priorities vary with the type of conflict being deterred.

This paper argues that military buildups lead to a significant rise in greenhouse gas emissions and can disrupt the green transition. Identifying military spending shocks, I use local projections to show that a percentage point rise in the military spending share leads to a 0.9–2% rise in total emissions, as well as a 1% rise in emission intensity, depending on the economy’s overall emission intensity. Using a dynamic production network model calibrated for the US, I find that a permanent shock of the same size would increase total emissions by between 0.25% and 1.38%, and emission intensity by between 0.12% and 1.06%. The empirical analysis tentatively suggests that green patenting may be reduced by 10–25% following such a shock, and the model suggests that investment in renewables could be crowded out by defence spending under certain circumstances, hindering the energy transition. I show in a directed technical change model that crowding out green innovation could result in the growth rate - not just the level - of emissions becoming higher. These effects can significantly raise climate damages. Depending on the social cost of carbon and the composition of a military spending shock, I estimate that permanently doubling the military spending share in the US in 2017 (equal to 3.3% of GDP) would have led to climate damages equivalent to between 0.05–1.81% of US GDP per year.

The COVID-19 pandemic affected all countries both in social and economic dimensions. Currently, vaccination is considered to be one of the most efficient solutions which can stop the further spread of the virus. Therefore, the paper aims to understand the factors that determined the social approval of the COVID-19 vaccines in Romania. To get a detailed picture on the situation, we looked not only at economic variables, but also at social and demographic components. Accordingly, the findings of the analysis list the variables that significantly influence the vaccination rate nationwide. The social approval (or the refusal) of these shots is a complex issue, thus it is essential that policymakers make decisions based on scientific evidence. The practical relevance of the paper lies in the two policy implications suggested (i.e., transparent and predictable policymaking and adjustments on the level of the education system in the long run for similar situations), which also highlight the importance of evidence-based decision-making processes in public health. Our analysis method consists of multivariate cross-sectional OLS regressions.