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Defense Expenditure and Economic Growth under External Predation

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  • Liu, Tao-Xiong
  • Hu, An-Gang
  • Zhou, Bi-Hua

Abstract

This paper develops a growth model of a country under a Hobbesian environment with international conflicts where national defense is the only way to prevent external predation. The long run growth path is determined by the equilibrium of a dynamic game with three players, the external predator, the government and the family. The equilibrium growth path has three phases, submissive equilibrium, tolerant equilibrium and full-protected equilibrium. Different defense strategies result in different growth prospects and sustainable growth will endogenously induce adjustment of defense strategies.

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File URL: http://mpra.ub.uni-muenchen.de/29286/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29286.

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Date of creation: 07 Jan 2011
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Handle: RePEc:pra:mprapa:29286

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Keywords: economic growth; predate; defense expenditure;

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