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AbstractThe objective of this study is to measure the stringency of strategic arms trade controls across countries and explain the variation herein. This regulatory framework is implemented by sovereign states to control the international transfer of military‐strategic items that potentially contain a security risk. For the purpose of this study, I apply a two‐stage approach. In the first step, I employ factor analysis on more than sixty regulatory indicators related to the rigorousness of and compliance to strategic arms trade controls in a particular country to construct two new measures. The first measure is related to the extent of implementing arms trade laws and legislation, while the second captures the enforcement and control of this kind of regulation. The individual country scores indicate that there exists substantial variation in the extent to which countries implement and enforce strategic trade regulations. Therefore, in the second step, I use the predicted factor scores as a dependent variable in a Bayesian Model Averaging analysis to test several economic and political theories and find the key drivers of the stringency of strategic arms trade regulations and control policies. The general findings of this analysis suggest that the implementation and enforcement of strategic arms trade controls are primarily determined by the trade‐off between two competing policy objectives: national security on the one hand and domestic economic interests on the other. In particular, the implementation effort of arms trade laws and legislation is mainly explained by economic factors, while the degree of enforcement and control is more associated with political factors.

AbstractThe aim of this study is to analyze the impact of the political violence during the Arab Spring on the stock market return of international defense firms. The direction of this impact is not directly straightforward as the civil unrests influence the expectations of investors in two opposite ways. On the one hand, investors might expect that when the peaceful demonstrations were turned into violent events, the Arab governments involved will start acquiring more military-strategic goods to repress the protests or send a strong signal of power to ensure their stay in office. However, on the other hand, when the popular protests escalated, investors, perhaps, became more concerned about the possible imposition of international military sanctions against the Arab Spring countries to restore peace and protect human rights. The main empirical findings of a dynamic panel model clearly confirm this pattern and point out that when the Arab Spring originated, the abnormal return of international defense stocks starts to rise immediately. However, in the course of time, the concerns of the introduction of arms embargoes become stronger and eventually start to dominate, causing the abnormal return to fall again, while the idiosyncratic risk began to fall due to enhanced diversification. It turns out that firm-specific factors can explain a substantial part of the effect found. For instance, the reaction of investors to the Arab Spring is significantly larger for firms that produce predominantly military goods.

AbstractThis study explores whether the amount of fossil fuel subsidies paid by the government is subject to an election cycle. Theoretically, it is not a priori directly clear whether the provision of fossil fuel subsidies should go up or down when elections are upcoming. On the one hand, governments may reap electoral benefits from offering additional support in an election year since voters generally prefer candidates from whom they expect to receive greater material well‐being by reducing the prices of basic goods. On the other hand, if the number of recipients is only small or when they are politically not well organized, reducing fossil fuel subsidies to finance a tax cut or an increase in other public spending areas that benefit and attract more voters might be a more successful re‐election strategy. My main empirical findings clearly show a U‐shaped election effect. It turns out that election cycles encourage fossil fuel support only in countries that have either a large or small fossil fuel demand. In these countries, governments are more inclined to provide additional fossil fuel support in an election year. In turn, I do not find any significant evidence for the notion that upcoming elections create a window of opportunity to reduce fossil fuel subsidies. Finally, the significant election effects are in particular visible during presidential elections.

This paper addresses two empirical questions. Is fiscal policy affected by upcoming elections? If so, do election-motivated fiscal policies enhance the probability of re-election of the incumbent? Employing data for 65 democratic countries over 1975-2005 in a semi-pooled panel model, we find that in most countries fiscal policy is hardly affected by elections. The countries for which we find a significant political budget cycle are very diverse. They include 'young' democracies but also 'established' democracies. In countries with a political budget cycle, election-motivated fiscal policies have a significant positive (but fairly small) effect on the electoral support for the political parties in government. Adapted from the source document.