Capital Destruction, Optimal Defense and Economic Growth
The effects of capital destruction are endogenized in a neoclassical growth model where the economy can optimally allocate part of its labor force to defend capital from being destroyed. The purpose is to explain the optimal allocation of the labor force between productive and deterrence activities along the optimal growth path in response to exogenous terrorist attacks against the material wealth of the economy. The article makes special case to the recent Colombian case and sheds some light on the dramatic increase in the defense activities in Colombia as a result of the increase of terrorist attacks by rebeld groups.
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- Carlos Esteban Posada & Francisco González, 2000. "El gasto en defensa, justicia y seguridad," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 2(2), pages 53-75, January-J.
- Alberto Alesina & Sule Ozler & Nouriel Roubini & Phillip Swagel, 1992.
"Political Instability and Economic Growth,"
NBER Working Papers
4173, National Bureau of Economic Research, Inc.
- Herschel I. Grossman & Minseong Kim, 1995.
"Predation and Accumulation,"
NBER Working Papers
5357, National Bureau of Economic Research, Inc.
- Armando Montenegro & Carlos Esteban Posada, 1995.
"Criminalidad en Colombia,"
- Robert J. Barro, 2003. "Nothing is Sacred: Economic Ideas for the New Millennium," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524155, March.
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