Dynamics of Military Spending in Israel

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Abstract
A model of military spending in Israel from 1960-1983 is developed. Domestic expenditures, U.S. military aid to Israel, and Israeli foreign defense purchases comprise the three main components of the model. Security concerns vis-a-vis the Arab states, war involvement, inflation, and election cycles are found to be exogenous influences on spending in Israel; equally important is the strong feedback that permits the domestic budget, imports, and military aid to influence one another jointly. Based on a mathematical model, several counterfactual simulation experiments are examined to evaluate possible trends in the evolution of Israeli military spending until the end of the decade. Neither optimistic (i.e., putatively deescalatory forces) nor pessimistic (those thought to bring about escalation) scenarios are found to be significantly different from one another. Under all scenarios examined, Israeli military spending grows rapidly at least until the end of the decade.

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