Economic crises and the initiation of militarized disputes

Abstract

Works in both prospect theory and diversionary war examine the relationship between negative political environments and increases in the initiation of international disputes. However, many of these tests and studies only make use of trend variables instead of sharp breaks in the status quo as triggers for states to engage in riskier behavior. This thesis proposes the use of economic crises as one such easily identifiable trigger that will lead policymakers to engage to greater likelihoods of militarized dispute initiation on the international level. Using a cross-sectional test covering 69 countries between 1816-2001, there is strong evidence of a link between economic crises (both in the same year and lagged by one year) and levels of aggression in states.