National security,military spending and the business cycle

This paper develops a Dynamic Stochastic General Equilibrium model where national security is an argument in the agent’s utility function and the government chooses optimally the level of military spending to maximize social welfare. National defense depends on military expenditure and on the strategic environment reflecting a potential hostile external threat. We use aggregate data on consumption, investment, and military spending for the US economy to estimate the parameters of the model. Estimation results suggest that consumption and national defense are complements and that military spending variability is mainly explained by external threat shocks although it also depends on the macroeconomic conditions. We compute impulse response functions of the main macroeconomic variables to several shocks: a total factor productivity shock, a defense technology shock, and a strategic environment shock. Surprisingly, we find that the optimal response to an increase in the external threat (a worsening in the strategic environment) will rise output by reducing consumption and increasing investment.     

Military Innovation and Tactical Adaptation in the Israel–Hizballah Conflict: The Institutionalization of Lesson-Learning in the IDF

This article highlights a pattern of military adaptation and tactical problem-solving utilized by the Israel Defense Forces (IDF) while engaged in protracted conflict with the Lebanese militant group Hizballah. It discusses the IDF’s recent attempts to institutionalize their historically intuitive process of ad-hoc learning by developing a formal tactical-level mechanism for ‘knowledge management’. The diffusion of this battlefield lesson-learning system that originated at lower-levels of the organization is examined, as well as its implementation and effectiveness during the 2006 Lebanon War. A nuanced analysis of IDF adaptation illustrates the dynamic interplay between both ‘top-down’ and ‘bottom-up’ processes of military innovation.     

从抗日民族统一战线的建立看中国共产党的中流砥柱作用

抗日战争是中华民族进行的一次伟大的民族解放战争。在这场为人类文明而战、为中华民族生存而战的残酷较量中,中国共产党及其领导的人民武装逐步成长为抗日民族统一战线的核心力量,成为中华民族团结抗战中坚不可摧的中流砥柱。     

Croatia's bitter harvest: Total National Defence's role in the Croatian War of Independence

Croatia's successful bid for independence was one of the defining moments of the immediate post-Cold War period. Nevertheless, the means that Croatia used to obtain independence remains relatively unexamined by academics. This article focuses on the early period of Croatia's bid for secession, and specifically the role that Yugoslavia's policy of Total National Defence played in facilitating its independence. Unlike in Slovenia, where the legacies of Total National Defence facilitated Slovenia's bid for secession, in Croatia the decision of its political leaders meant that the country largely neglected its positive legacies, resulting in a protracted four-year struggle.     

The unnecessary uprising: Jeju Island rebellion and South Korean counterinsurgency experience 1947–48

This paper systematically analyzes the causes of the escalation of violence during the initial stages of the Jeju Island Rebellion and the failure of South Korean counterinsurgency operations. It is argued that four interrelated factors provided the conditions for armed insurgency in the small island of Jeju: inter-agency tension between the Korean National Police (KNP) and the Korean Constabulary; the mainlanders' misinterpretation of the insurgency; the effect of systematic police brutality; and the role of youth groups. Consequently, two counterinsurgency lessons will be drawn from this study: that inter-agency cooperation and coordination at the tactical level between security branches and the incorporation of local population at the micro-level is essential in conducting efficient and effective counterinsurgency operations.     

The structure of defense production in the United States, 1929‐∗

This article contains a critical review of the literature on the economics of military affairs in Greece and Turkey as of December 1999. In particular, I review (a) arms race models; (b) models of the demand for military expenditure; (c) models measuring the economic impact of military expenditure; and (d) literature and issues related to indigenous arms production. I conclude with a number of summary lessons and observations of how future research might improve upon the existing body of work.     

Endogenous Growth and Defense Expenditures: A New Explanation of the Benoit Hypothesis

This paper develops an endogenous growth model to examine the linkage between military expenditures and economic growth. We adopt the modeling strategy where both the supply side and the demand side effects of national defense are taken into considerations. Our result finds that a rise in military spending tends to stimulate the sustained growth rate, confirming Benoit's famous empirical findings.     

The structure of the defense industry and the security needs of the country: a differentiated products model

This paper models the interactions between the defense needs of the USA and Western Europe, which produce several heterogeneous defense goods, and the defense industry market structure. The results show that net defense costs of the USA and Europe are lower when the number of defense firms in each arms‐producing country is small and when the world prices of the defense goods are high. The model predicts that the increase in world prices will crowd‐out countries in the developing world from the market for modern weapon systems and may force them to develop and use ‘cheap and dirty’ weapon systems.     

TIME-VARYING CHARACTERISTICS OF SOUTH KOREA-UNITED STATES AND JAPAN-UNITED STATES MILITARY ALLIANCES UNDER CHINESE THREAT: A PUBLIC GOOD APPROACH

This paper investigates the nature of two military alliances under Chinese threat. The findings are as follows: First, South Korea does not consider China a significant threat while Japan and the United States have recognized China as a serious threat since the 1990s and the 2000s, respectively. Second, the relationship between South Korea and the United States is a true military alliance for all time periods, but the nature of the alliance has changed since the 1970s. Third, although Japan began to form an alliance relationship with the United States in the 1990s, Japan is considered a more significant ally by the United States. This paper implies that, should China provoke a military confrontation, it might be difficult to deduce a common solution among the three countries because of the different response to military threats from China.     

THE EFFECTS OF THE WORLD DEFENSE INDUSTRY AND US MILITARY AID TO ISRAEL ON THE ISRAELI DEFENSE INDUSTRY: A DIFFERENTIATED PRODUCTS MODEL

This paper models the interactions between the defense industry market structure and the defense needs of Israel, the USA and Western Europe, which produce several heterogeneous defense goods. The model specifies that the defense industries of the US and Europe are ‘large’ while that of Israel is ‘small’. The US military aid to Israel is also an integral part of the model. The results show that net defense costs of Israel are minimal when the number of its defense firms is one. The model predicts that an increase in US military aid reduces Israel’s government expenditure, its defense industry’s profits and its net defense costs.