In the original framework of Professors Acemoglu and Robinson, the government is unable to oppress the revolution once it is brought about. However, actual civil wars are unpredictable. With this notion, I introduce uncertainty depending on military expenditures of the government. Then an...

We present a dynamic two-country model in which military spending, geopolitical risk, and government bond prices are jointly determined. The model is consistent with three empirical facts: hegemons have a funding advantage, this advantage rises with geopolitical tensions, and war losers suffer...