The model links the threat indicator to an action-reaction dynamic only if the model user leaves the action-reaction switch (ACTREAON) at "1." Setting it to 0.0 will turn off action-reaction. When that switch is thrown, threat affects military spending in a process that can set up a positive feedback loop to increase or decrease the spending of acting and reacting countries or regions. The model calculates a multiplier on military spending (GKMUL) based on the level of threat (THREAT) in comparison with the initial level. Dyads have different reactivities to each other; the United States is not as concerned by an increase in British defense spending as by an increase in Chinese spending – in fact the U.S. might welcome the British increase and feel able to shave its own rather than increase it. A parameter (reac) gives the user control over this reactivity differential. In the GLOBUS modeling project, Dale Smith developed a formulation to endogenize such reactivity coefficients for dyads, in response to trade and other factors. Because the dyadic threat formulation of IFs already incorporates a very large number of dyadic and global factors, it would be redundant to build them into the reactivity parameter, which serves, instead, to provide the user some dyadic specific control over arms spending action/reaction. The addition of the number 10 to numerator and denominator in the formulation has a fundamentally technical basis – if there is a very low level of initial threat in a dyad (say Belgium and Ecuador), small changes in the numerator should not be permitted to give rise to large changes in the ratio and therefore the multiplier on defense spending.
The multiplier shifts government expenditures into or away from the military and adjusts all other categories of expenditures proportionately to their size as calculated earlier, normalizing all expenditures (GDS) to the total level of government consumption (GOVCON).
The action-reaction dynamic thus works across the entire governmental expenditure and economic model. For instance, the normal "burden" term in the action-reaction dynamic is unnecessary because the economic model captures the burden of increased government spending on the military when it reduces spending on health and education.