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Defense Expenditure and Economic Growth under External Predation

Author

Listed:
  • 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.

Suggested Citation

  • Liu, Tao-Xiong & Hu, An-Gang & Zhou, Bi-Hua, 2011. "Defense Expenditure and Economic Growth under External Predation," MPRA Paper 29286, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29286
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    File URL: https://mpra.ub.uni-muenchen.de/29286/1/MPRA_paper_29286.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    economic growth; predate; defense expenditure;
    All these keywords.

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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