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GUNS AND OIL: AN ANALYSIS OF CONVENTIONAL WEAPONS TRADE IN THE POST‐COLD WAR ERA
Author(s) -
KHANEHA,
CHAPMAN DUANE
Publication year - 2010
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2008.00203.x
Subject(s) - crude oil , economics , oil supply , oil price , cold war , value (mathematics) , international trade , gulf war , trade war , international economics , economy , agricultural economics , monetary economics , china , economic history , law , engineering , political science , petroleum engineering , machine learning , politics , computer science
This paper analyzes the global conventional weapons trade between 1989 and 1999. We postulate that a key reason for the huge transfer of weapons to the Persian Gulf region is the enormous value of the oil wealth there along with the dependence of Western economies on access to the relatively cheap and steady supply of crude oil. We find a strong, positive, and robust empirical association between arms trade and crude oil trade and explain it as the result of a target price band arrangement that was responsible for the remarkably stable crude oil prices during our study period. ( JEL F10, F59, Q38)