Europe must rapidly increase its military spending, but how? We collect 150 years of data to study what governments in similar situations have done. How were past military buildups financed? What was the relative importance of debt financing, budget cuts, and taxes? Our main finding is that...

Various options are being discussed to increase Germany's defense capabilities. Increasing the size of the Bundeswehr is proving difficult, and compulsory military service hardly seems feasible for economic and socio-political reasons. A European army and technological alternatives such as...

Europe can no longer rely on the United States for its defence but is currently lacking essential capabilities to assure security itself. European countries should not give up on NATO but seek to close capability gaps by developing the European defence industrial base. The EU can play an...

The design of an operationally and militarily prepared Bundeswehr of the future requires the consideration of multiple facets. Its operation requires reliable access to economic resources (labour, capital, land) and their efficient management. This completely addresses the contradiction between...

The reduction in defense spending, often referred to as the “peace dividend,” from 2.7 % to 2.8 % of Germany’s GDP in the late 1980s to just 1.2 % of GDP by the end of the 2010s, has led to a near-complete loss of defense capability over more than 30 years. Given the current global...

Die Koalitionssondierungen haben zu einer Einigung bei der Finanzierung von Infrastruktur und Rüstung geführt. Diese sieht vor, die Schuldengrenze im Grundgesetz bestehen zu lassen und sie zugleich mithilfe von kreditfinanzierten Sondervermögen bzw. Ausnahmeklauseln zu umgehen. Das wirft die...

Die Koalitionssondierungen haben zu einer Einigung bei der Finanzierung von Infrastruktur und Rüstung geführt. Diese sieht vor, die Schuldengrenze im Grundgesetz bestehen zu lassen und sie zugleich mithilfe von kreditfinanzierten Sondervermögen bzw. Ausnahmeklauseln zu umgehen. Das wirft die...

• By reducing reliance on fossil fuels, EU climate policy substantially lowers Russia's financial strength, thereby limiting its military capabilities to sustain its aggression on Ukraine and beyond. • We provide estimates for the security dividend of EU climate policy. • A one-euro...

National defence is a quintessential public good which generates welfare but does not have a market price to be used for its valuation. This study uses non-market valuation, namely a discrete choice experiment, to enhance the understanding of how individuals' perceptions of threat influence...

Using a short- and long-term macroeconomic forecasts, we estimate the cost of the Russian full-scale invasion of Ukraine for countries in Eastern Europe, Caucasus, and Central Asia. Shortly after the Russian attack, the projected cost (cumulative over six years) stood at $2.44 trillion for the...

Expanding military personnel and expenditure depends on public support and social legitimacy. Crisis events such as 9/11 and the 2014 annexation of Crimea have influenced public attitudes toward military investment, with support intensifying significantly after Russia's full-scale invasion of...

Research & development (R&D) subsidies, especially defense R&D spending, raise private R&D investment (a crowd-in effect). Public R&D funding increases employment without driving up wages. Supported industries see gains in productivity. International spillovers amplify the impact across...

This report updates and expands the data-driven work of our initial study from September 2024, which concluded that Europe would only be fit for war in several decades. We show that the situation today is even more concerning if Europe aims to be fit for war by 2030. First, Russia continues to...

Europe faces a dual crisis of growing security threats and declining economic competitiveness. Increased defence spending offers an opportunity to address both challenges. Through initiatives such as ReArm Europe and NATO's 5% pledge, EU Member States are committing substantial resources to...

Europe faces a dual crisis of growing security threats and declining economic competitiveness. Increased defence spending offers an opportunity to address both challenges. Through initiatives such as ReArm Europe and NATO's 5% pledge, EU Member States are committing substantial resources to...

This Economic Brief analyses the euro area fiscal stance, i.e. the impulse that national and the EU budgets provide to the euro area economy, with a focus on the 2024-2026 period. In the euro area, the European Central Bank (ECB) is entrusted with the objective of maintaining price stability...

The European Union is grappling with the challenge of increasing defence expenditure while maintaining fiscal discipline under the Stability and Growth Pact (SGP). The European Commission has proposed activating the national escape clause available under the SGP to accommodate defence spending...

In 2024, total defence expenditure by the 27 EU Member States reached €343 billion, marking a 19% increase from 2023, bringing defence expenditure to 1.9% of GDP. Estimated data suggests that Member States may reach beyond the 2% NATO guideline in 2025, to €392 billion (current prices,...

In 2024, total defence expenditure by the 27 EU Member States reached €343 billion, marking a 19% increase from 2023, bringing defence expenditure to 1.9% of GDP. Estimated data suggests that Member States may reach beyond the 2% NATO guideline in 2025, to €392 billion (current prices,...

Since Russia's full-scale invasion of Ukraine on 24 February 2022, a process of securitisation of the European Union's (EU) external action can be observed. From an institutional perspective, the Common Foreign and Security Policy (CFSP) increasingly overlaps with the Common Security and Defence...

This paper revisits the empirical analysis of Nakamura and Steinsson (2014). I reconstruct and extend the original dataset to cover the period 1966-2019, harmonizing two major sources of data: the Defense Contract Action Data System (DCADS) and USAspending.gov. I discuss how to aggregate these...

Objective: To examine the impact of geopolitical risk on military spending in Poland in the years 1993-2022. Research Design & Methods: Autoregressive distributed lags, error correction, and Granger causality test were used. Findings: Polish budgetary spending on defence is influenced by...

Europe needs to take more responsibility for its own security. While EU Member States have made substantial new resources available for European defence, and European defence companies are thriving, more needs to be done. National defence spending will likely continue to rise but there is also...

Europe needs to take more responsibility for its own security. While EU Member States have made substantial new resources available for European defence, and European defence companies are thriving, more needs to be done. National defence spending will likely continue to rise but there is also...

Europe must take more responsibility for its defence, if necessary without the United States, given Washington’s volatility. In March 2025, the European Union (EU) launched a series of initiatives to strengthen defence industry and defence policy cooperation. With these new instruments also...

What determines the effectiveness of military buildups? We introduce the concept of the military multiplier: the percentage increase in military equipment an additional dollar buys. It varies with the costs of allocating resources to military production, depending, among other things, on the...

The design of an operationally and militarily prepared Bundeswehr of the future requires the consideration of multiple facets. Its operation requires reliable access to economic resources (labour, capital, land) and their efficient management. This completely addresses the contradiction between...

Various options are being discussed to increase Germany's defense capabilities. Increasing the size of the Bundeswehr is proving difficult, and compulsory military service hardly seems feasible for economic and socio-political reasons. A European army and technological alternatives such as...

The article examines the evolution of the current technological paradigm, based on digital technologies, considering the interaction between civilian and military trajectories, with a focus on the US case. Building on an original political economy framework, the activities of corporations and...

Peace does not rest on the goodwill of others but on our capacity to defend ourselves and deter threats. The full-scale invasion of Ukraine in 2022 shattered whatever i l lus ions rema ined about Europe's immediate environment. Russia is intent on causing maximum harm to Ukrainians while running...

Peace does not rest on the goodwill of others but on our capacity to defend ourselves and deter threats. The full-scale invasion of Ukraine in 2022 shattered whatever i l lus ions rema ined about Europe's immediate environment. Russia is intent on causing maximum harm to Ukrainians while running...

Economic resources are often seen as decisive for the outcomes of military conflicts. This paper asks whether “deeper pockets” help win wars. We construct a fine-grained dataset covering more than 700 interstate disputes and rely on exogenous resource price shocks to estimate the causal...

Europa muss seine Militärausgaben deutlich erhöhen, aber wie? Diese Frage beantworten wir mit einem Blick in die Geschichte. Wie haben Regierungen in der Vergangenheit in ähnlichen Situationen reagiert? Wie wurden Aufrüstung und Kriege typischerweise finanziert - durch Schulden, Steuern oder...

Europe must rapidly increase its military spending, but how? We collect 150 years of data to study what governments in similar situations have done. How were past military buildups financed? What was the relative importance of debt financing, budget cuts, and taxes? Our main finding is that...

This paper investigates how an increase in military expenditures affects an economy. It is written in the context of rising geopolitical tensions that have spurred increased military spending in the United States, Europe, and other economic areas. It draws on a large literature in...

Canada and other members of the North Atlantic Treaty Organization (NATO) are facing higher defence-spending targets in response to growing geopolitical tensions. NATO's 2025 Hague Summit Declaration requires member states to increase their defence spending to five percent of their GDP by 2035....