Research

Industrial wars of attrition are drawn-out conflicts where victory is decided in large part by which combatant is able to outproduce its opponent in terms of military materiel. This paper argues that under the risk of such a war, industrial capacity in the defence sector and its supply chains generates a national security externality, as it can deter a potential aggressor from invading. Using a simple macroeconomic model, I show that in a decentralized equilibrium, atomistic investors underinvest in defence industrial capacity, as they do not internalize this effect. Governments can significantly improve upon this outcome by subsidizing immobile factors in these industries, and can achieve the first-best outcome if they are able to commit to wartime weapon purchases.

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 0.36% and 1.81%, and emission intensity by between 0.22% and 1.5%. The empirical analysis indicates that green patenting is 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 annual growth rate - not just the level - of emissions becoming higher. These effects can significantly raise climate damages and temperatures. Depending on the social cost of carbon and the composition of a military spending shock, I estimate that 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 0.07-2.6% of 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.