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    The Macroeconomics of Dr. Strangelove

    Pecchenino, Rowena A. (1993) The Macroeconomics of Dr. Strangelove. American Economic Review, 83 (1). pp. 43-62. ISSN 0002-8282

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    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 weapons accumulation. Zero accumulation is a possible equilibrium with both noncooperative and cooperative behavior. Countries may also accumulate weapons to the point where conflict initiation never occurs. Pareto-improving policies are generally available, but international cooperation need not be Pareto-improving.

    Item Type: Article
    Keywords: Macroeconomics; Dr.Strangelove;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8520
    Depositing User: Prof. Rowena Pecchenino
    Date Deposited: 26 Jul 2017 11:52
    Journal or Publication Title: American Economic Review
    Publisher: American Economic Association
    Refereed: Yes
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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