Graduation Year
2026
Date of Submission
11-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Nishant Dass
Abstract
The “guns vs. butter” debate has long framed the tension between military and welfare spending, but this thesis reveals that the tradeoff is far more complex than traditionally assumed. This study re-examines the tradeoff in OECD economies from 2000 to 2023, using fixed-effects and within-between Mundlak models to distinguish between short-run adjustments and long-run structural patterns. My results show no clear evidence of year-to-year substitution; instead, welfare commitments in advanced OECD countries are institutionally rigid and insulated from contemporaneous military spending pressures. Crowding out primarily presents itself as a structural pattern—countries with consistently higher military burdens allocate a smaller share of spending to social welfare. However, partisanship further impacts these dynamics: right-leaning governments are uniquely likely to reduce welfare commitment under high military pressure, while left and centrist governments do not. A decomposition of welfare spending into allocations for health and family spending reveals no economically meaningful displacement effects in either domain. Ultimately, my findings show that in advanced economies, tradeoffs emerge primarily through slow-moving structural differences rather than active reallocation.
Recommended Citation
Garg, Nyassa, "Beyond Guns and Butter: Structural Fiscal Priorities and the Politics of Welfare in OECD Economies, 2000-2023" (2026). CMC Senior Theses. 4360.
https://scholarship.claremont.edu/cmc_theses/4360
