A democratic leader, anticipating a ''rally 'round the flag effect,'' may have an incentive to divert attention from domestic economic problems by becoming involved in military conflict abroad, undermining Immanuel Kant's prescription for ''perpetual peace.'' We assess the risk to the democratic peace by evaluating this diversionary incentive within a general dyadic model of interstate conflict, 1921-2001, using both directed and nondirected analyses. Our results indicate that economic conditions do affect the likelihood that a democracy, but not an autocracy, will initiate a fatal militarized dispute, even against another democracy. Economic growth rates sufficiently low to negate the democratic peace are, however, rare; and the behavior of five powerful democracies raises further doubts about the importance of diversions. We find no significant evidence that a bad economy makes a democratic state less likely to be targeted by others, nor does the timing of legislative elections influence the decision of democratic leaders to use force. Although economic conditions affect the likelihood of a fatal dispute for democracies, the influence is sufficiently small that Kant's hope for a more peaceful world does not seem misplaced.Scores of studies indicate that democracies are much less likely to become involved in military conflict with one another than are two autocracies or a mixed pair of states. This is good news because the number of democracies continues to grow. The long-term prospect, according to Immanuel Kant (1991Kant ( [1795) and other liberals, is a world of democratic states living together peacefully. There has been an important undercurrent of research, however, suggesting that democratic leaders sometimes have an incentive to use military force, not to make their countries more secure, but to improve their public approval ratings and their chance of remaining Authors' note: We are grateful for the helpful comments of