“…Similarly, military alliances are widely accepted as a tool that can reduce the risk of conflict (Leeds, 2003;Johnson and Leeds, 2011;Benson, 2011;Fang, Johnson and Leeds, 2014), but both alliance formation and conflicts are driven by the (typically unobserved) interests and security environment of the states involved. Failing to account for these interests leads to bias in the estimation of the impact of alliances on conflict (Levy, 1981;Bearce, Flanagan and Floros, 2006). In the same vein, poor economic conditions are thought to increase the risk of terrorism (Blomberg, Hess and Weerapana, 2004;Freytag, Krüger, Meierrieks and Schneider, 2011;Meierrieks and Gries, 2012), but important variables such as political freedom affect both the state of the economy and the incidence of terrorism (Grier and Tullock, 1989;Krieger and Meierrieks, 2011).…”