The Leibniz Institute for Financial Research SAFE, the Institute for Banking and Financial History (IBF), and the Center for Financial Studies (CFS), jointly organize and cordially invite you to attend a web seminar on
Guns vs. Butter? How States Finance Wars and the Military
Christoph Trebesch (Kiel Institute for the World Economy and Kiel University), joint work with Jonathan Federle and Johannes Marzian
Moderator: Florian Heider (Leibniz Institute SAFE)
to be held on 3 July, 2 p.m. - 3:00 p.m. CEST, online via Zoom
European governments announced to strongly increase their defense spending over the next decade, but how can this military buildup be financed? This paper looks back to history to understand how governments in similar situations have responded. We collect a new “Global Budgets Database” spanning 150 years and 22 large countries. The data traces government expenditures not just on the military but on social and other types of spending as well. We use this novel data to identify “military booms,” defined as strong increases in military spending and then study their financing. We focus on three main financing options for more “guns”: (i) cuts in social spending (less “butter”), (ii) higher taxes, and (iii) more debt. We find that cuts in social spending are the exception rather than the rule. “Guns” have almost never been financed by cutting “butter”. Instead, most military buildups were financed via budget deficits and debt accumulation, in line with theory. Also taxes play an important role, especially during peacetime military buildups.
Christoph Trebesch is a Professor at the Kiel Institute for the World Economy and Kiel University. His research focuses on international finance and macroeconomics as well as political economy and geoeconomics. He has been awarded a prestigious ERC Consolidator Grant in 2023 and, in 2024, he received the Gossen Prize for outstanding German economists under the age of 45. His work is regularly cited in leading global media outlets and has been published in top economic journals such as the American Economic Review, the Quarterly Journal of Economics or the Journal of Political Economy.
The attendance is free of charge but registration is required. The Zoom link will be provided after registration.
