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| Lipow, Jonathan; Plessner, Yakir. |
| Intuitively, we would expect that an increase in the military preparations of potential enemies imply that the rival perceives an increase in the likelihood of future conflict. In this paper, we present a simple model that suggests that, surprisingly, the relationship is ambiguous. We find that (a) the specification of the social utility function; and (b) the rate of substitution between long and short lead-time preparations in the production of defense capability play a role in determining whether rivals respond to an increased future threat, by increasing or decreasing their long lead-time preparations. |
| Tipo: Working or Discussion Paper |
Palavras-chave: International Relations/Trade. |
| Ano: 2001 |
URL: http://purl.umn.edu/14978 |
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| Lipow, Jonathan; Plessner, Yakir. |
| In the defense policy literature, it is widely believed that there is a pronounced bias towards the procurement of a less than optimal number of excessively sophisticated weapons. In this paper, we consider the possibility that this perceived bias is the result of the timing and informational structure of defense procurement decisions, and the inter-relationship of this structure with overall fiscal policy. Specifically, this paper presents a model that suggests that tax smoothing considerations of the type first articulated in Barro (1979) could lead social welfare maximizing decision makers to choose a higher level of weapon quality than would be optimal if government revenue could be raised without resort to distortionary taxation. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Defense procurement; Weapon quality; Tax smoothing; Public Economics; H57. |
| Ano: 2005 |
URL: http://purl.umn.edu/7136 |
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