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The Macroeconomics of Dr. Strangelove

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  • John, A Andrew
  • Pecchenino, Rowena A
  • Schreft, Stacey L

Abstract

This paper examines the weapons-accumulation decisions of two adversarial countries in the context of a deterrence/conflict initiation game embedded in an overlapping-generations model. The demographic structure permits analysis of both within- and between-country intergenerational externalities caused by past weapons-accumulation decisions, as well as of intragenerational externalities from the adversary's current weap ons accumulation. Zero accumulation is a possible equilibrium with both noncooperative and cooperative behavior. Countries may also accumula te weapons to the point where conflict initiation never occurs. Pareto-improving policies are generally available but international cooperation need not be Pareto-improving. Copyright 1993 by American Economic Association.

Suggested Citation

  • John, A Andrew & Pecchenino, Rowena A & Schreft, Stacey L, 1993. "The Macroeconomics of Dr. Strangelove," American Economic Review, American Economic Association, vol. 83(1), pages 43-62, March.
  • Handle: RePEc:aea:aecrev:v:83:y:1993:i:1:p:43-62
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    Citations

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    Cited by:

    1. Levine, Paul & Smith, Ron, 1997. "The arms trade and the stability of regional arms races," Journal of Economic Dynamics and Control, Elsevier, vol. 21(2-3), pages 631-654.
    2. Sylvain Chassang & Gerard PadrĂ³ I Miquel, 2010. "Conflict and Deterrence Under Strategic Risk," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1821-1858.
    3. John, A. & Pecchenino, R. & Schmmelpfennig, D. & Schreft, S., 1990. "External Increasing Returns , Short-Lived Agents and Long- Lived Waste," Papers 8903, Michigan State - Econometrics and Economic Theory.
    4. repec:eee:jeborg:v:147:y:2018:i:c:p:28-40 is not listed on IDEAS
    5. John, A. & Pecchenino, R. & Schimmelpfennig, D. & Schreft, S., 1995. "Short-lived agents and the long-lived environment," Journal of Public Economics, Elsevier, vol. 58(1), pages 127-141, September.

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