Question A:
A substantial increase in defense spending largely funded by government borrowing would deliver a measurable boost to economic growth over the next five years.
Responses
Responses weighted by each expert's confidence
Question B:
Increasing public investment in defense R&D would generate substantial technological spillovers and productivity gains in addition to the boost to national military capabilities.
Responses
Responses weighted by each expert's confidence
Question C:
The market power of defense suppliers substantially raises procurement costs without adding to military capabilities.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
 Franklin Allen |
Imperial College London | Bio/Vote History | ||
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This is a difficult issue with a great deal uncertainty. However, it seems that defence spending needs to focus to considerable degree on innovation and this may lead to direct growth and spill over effects.
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 Pol Antras |
Harvard | Bio/Vote History | ||
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 Emmanuelle Auriol |
Toulouse School of Economics | Bio/Vote History | ||
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 Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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probably, but, if indeed debt financed, through the fiscal boost to demand. The supply side effects can go either way, crowding out investment more directly useful to growth
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 Richard William Blundell |
University College London | Bio/Vote History | ||
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 Maristella Botticini |
Bocconi | Bio/Vote History | ||
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 Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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In some countries, there is a risk of increasing spreads, given current fiscal situation.
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 Julia Cagé |
Sciences Po | Bio/Vote History | ||
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 Elena Carletti |
Bocconi | Did Not Answer | Bio/Vote History | |
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 Jean-Pierre Danthine |
Paris School of Economics | Did Not Answer | Bio/Vote History | |
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 Paul De Grauwe |
LSE | Bio/Vote History | ||
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 Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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 Antonio Fatás |
INSEAD | Bio/Vote History | ||
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 Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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 Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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 Luis Garicano |
LSE | Did Not Answer | Bio/Vote History | |
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 Yuriy Gorodnichenko |
Berkeley | Bio/Vote History | ||
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 Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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 Veronica Guerrieri |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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 Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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 Sergei Guriev |
London Business School | Bio/Vote History | ||
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 Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Especially if the borrowing is collective across the EU
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 Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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 Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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Defense spending will be, at least in part, a net addition to public investment.
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 Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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 Eliana La Ferrara |
Harvard Kennedy | Bio/Vote History | ||
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 Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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More plausible in the short-run but over 5 years the effect it is uncertain and depends on a variety of factors such as monetary policy, spare capacity, how much is imported or spent domestically, and the composition of defense spending (e.g., how much R&D).
-see background information here -see background information here -see background information here |
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 Kalina Manova |
University College London | Bio/Vote History | ||
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 Thierry Mayer |
Sciences-Po | Bio/Vote History | ||
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 Costas Meghir |
Yale | Bio/Vote History | ||
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 Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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 Elias Papaioannou |
London Business School | Bio/Vote History | ||
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ample micro and macro evidence on the positive working via innovation effects of large military spending, like WWII (DARPA), on growth (besides positive short-run multiplier effects). See among other Antolin-Diaz and Surico (AER), Surico, Martinez, Gazzani and Natoli)
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 Lubos Pastor |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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 Richard Portes |
London Business School | Did Not Answer | Bio/Vote History | |
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 Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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 Carol Propper |
Imperial College London | Bio/Vote History | ||
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 Imran Rasul |
University College London | Bio/Vote History | ||
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 Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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 Ricardo Reis |
London School of Economics | Bio/Vote History | ||
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Depends on the composition of that spending. But, given recent proposals and the track record outside of armed conflict, I am pessimistic.
-see background information here |
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 Rafael Repullo |
CEMFI | Bio/Vote History | ||
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However, if the increase in domestic spending translates into purchases to foreign defense suppliers, it will not do much to boost domestic economic growth.
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 Antoinette Schoar |
MIT | Bio/Vote History | ||
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 Kjetil Storesletten |
University of Minnesota | Did Not Answer | Bio/Vote History | |
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 Per Strömberg |
Stockholm School of Economics | Bio/Vote History | ||
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 Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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 John Van Reenen |
LSE | Bio/Vote History | ||
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Ultimately defence spending has to be met with tax increases
-see background information here |
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 Rick Van der Ploeg |
Oxford | Bio/Vote History | ||
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 John Vickers |
Oxford | Bio/Vote History | ||
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 Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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unclear how much extra capacity exists that could be activated; debt levels are very high across Europe already
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 Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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Yes, I think there is a fair chance this will happen. The way of fighting wars is changing significantly given what is happening in Ukraine and Iran. Innovation is critical factor so there may be significant spill over effects.
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Pol Antras |
Harvard | Bio/Vote History | ||
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Emmanuelle Auriol |
Toulouse School of Economics | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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"substantial" is too strong (remember the remark that teflon was one of the main effects of NASA on the economy). More directly targeted investment would do more.
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Richard William Blundell |
University College London | Bio/Vote History | ||
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Maristella Botticini |
Bocconi | Bio/Vote History | ||
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Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Depends on market structure, procurement process, etc.
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Julia Cagé |
Sciences Po | Bio/Vote History | ||
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Elena Carletti |
Bocconi | Did Not Answer | Bio/Vote History | |
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Jean-Pierre Danthine |
Paris School of Economics | Did Not Answer | Bio/Vote History | |
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Paul De Grauwe |
LSE | Bio/Vote History | ||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Antonio Fatás |
INSEAD | Bio/Vote History | ||
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Luis Garicano |
LSE | Did Not Answer | Bio/Vote History | |
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Yuriy Gorodnichenko |
Berkeley | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Sergei Guriev |
London Business School | Bio/Vote History | ||
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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The answer to this question depends on whether or not the defense items purchased are being newly developed, e.g. in Europe, or off-shelf from, e.g., the US.
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Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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Eliana La Ferrara |
Harvard Kennedy | Bio/Vote History | ||
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Recent evidence supports the statement, indicating that defense R&D crowds in private R&D and produces technological and productivity spillovers, but returns depend on program design and technology diffusion
-see background information here -see background information here -see background information here -see background information here |
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Kalina Manova |
University College London | Bio/Vote History | ||
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Thierry Mayer |
Sciences-Po | Bio/Vote History | ||
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Costas Meghir |
Yale | Bio/Vote History | ||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Elias Papaioannou |
London Business School | Bio/Vote History | ||
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Lubos Pastor |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Richard Portes |
London Business School | Did Not Answer | Bio/Vote History | |
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Carol Propper |
Imperial College London | Bio/Vote History | ||
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Imran Rasul |
University College London | Bio/Vote History | ||
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Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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Ricardo Reis |
London School of Economics | Bio/Vote History | ||
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It can, under the right circumstances, which is not quite close to enough to the "would" in the question.
-see background information here |
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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Kjetil Storesletten |
University of Minnesota | Did Not Answer | Bio/Vote History | |
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Per Strömberg |
Stockholm School of Economics | Bio/Vote History | ||
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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Much empirical evidence that defence R&D can boost productivity growth and crowd in private innovation if crafted wisely.
-see background information here -see background information here |
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Rick Van der Ploeg |
Oxford | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
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Depends on the counterfactual. E.g. compare public funding of scientific research.
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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doubtful; Europe especially has not shown great talent for this
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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The risk is that public investment is invested into laggard national champions.
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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It's a very difficult issue whether monopoly or competition leads to more innovation. I think this issue is uncertain. It depends very much on the particular situation.
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Pol Antras |
Harvard | Bio/Vote History | ||
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Provided that market power exists. I admit total ignorance about the market power of that sector.
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Emmanuelle Auriol |
Toulouse School of Economics | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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not just monopoly power, but straight lobbying.
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Richard William Blundell |
University College London | Bio/Vote History | ||
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Maristella Botticini |
Bocconi | Bio/Vote History | ||
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Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Julia Cagé |
Sciences Po | Bio/Vote History | ||
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Elena Carletti |
Bocconi | Did Not Answer | Bio/Vote History | |
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Jean-Pierre Danthine |
Paris School of Economics | Did Not Answer | Bio/Vote History | |
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Paul De Grauwe |
LSE | Bio/Vote History | ||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Antonio Fatás |
INSEAD | Bio/Vote History | ||
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Luis Garicano |
LSE | Did Not Answer | Bio/Vote History | |
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Yuriy Gorodnichenko |
Berkeley | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Sergei Guriev |
London Business School | Bio/Vote History | ||
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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In defense markets, political considertions typically play a big role, reducing competition from alternative suppliers.
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Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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Eliana La Ferrara |
Harvard Kennedy | Bio/Vote History | ||
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Supplier concentration weakens competition and can create inefficient contracting, but evidence is mixed. See two studies below illustrating that evidence/answer is uncertain.
-see background information here -see background information here |
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Kalina Manova |
University College London | Bio/Vote History | ||
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Thierry Mayer |
Sciences-Po | Bio/Vote History | ||
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Costas Meghir |
Yale | Bio/Vote History | ||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Elias Papaioannou |
London Business School | Bio/Vote History | ||
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Lubos Pastor |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Richard Portes |
London Business School | Did Not Answer | Bio/Vote History | |
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Carol Propper |
Imperial College London | Bio/Vote History | ||
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Imran Rasul |
University College London | Bio/Vote History | ||
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Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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Ricardo Reis |
London School of Economics | Bio/Vote History | ||
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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This is an important point but depends on the execution and governance of the defense spending and investments.
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Kjetil Storesletten |
University of Minnesota | Did Not Answer | Bio/Vote History | |
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Per Strömberg |
Stockholm School of Economics | Bio/Vote History | ||
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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Defence procurement highly concentrated in primes which leads to higher prices, worse quality and lack of innovation (this has got worse in US over last 30 years)
-see background information here |
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Rick Van der Ploeg |
Oxford | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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What else is new?
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