Prudence versus predation and the gains from trade

• Published in: Journal of economic theory Vol. 201; p. 105434
• Main Authors: Garfinkel, Michelle R., Syropoulos, Constantinos, Zylkin, Thomas
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.04.2022
• Subjects: Arming; Interstate disputes; Investment decisions; Trade openness; D30; D74; Interstate disputes; Arming; F51; F10; F20; Investment decisions; Trade openness

We analyze a dynamic, two-country model that highlights the various trade-offs each country faces between current consumption and competing investments in its future productive and military capacities as it prepares for a possible conflict in the future. Our focus is on the circumstances under which...