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The political economy of the peace dividend

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Abstract

We develop a model of the peace dividend and use it to predict the fiscal consequences of a reduction in the demand for military spending. The model is based on the assumption that the political process responds to political demands and costs in a way that maximizes net political benefits. The predictions of our model on how a peace dividend will be allocated over nonmilitary spending, tax relief, and deficit reduction is tested against the experience of eight major wars in United States history.

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Authors and Affiliations

  1. Department of Economics, University of Georgia, 30602, Athens, GA

    Dwight R. Lee

  2. Department of Economics, Ohio University, Athens, OH

    Richard K. Vedder

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  1. Dwight R. Lee
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  2. Richard K. Vedder
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Lee, D.R., Vedder, R.K. The political economy of the peace dividend. Public Choice 88, 29–42 (1996). https://doi.org/10.1007/BF00130407

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  • DOI: https://doi.org/10.1007/BF00130407

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