Article ID Journal Published Year Pages File Type
987007 Review of Economic Dynamics 2010 21 Pages PDF
Abstract

We present a two-country version of Hansen and Prescott's two-sector long-run growth model, introducing war by letting the countries take land from each other, at the cost of destroying capital and killing people. Because land is an input only in the Malthus sector the transition to a Solow economy brings a decline in warfare, broadly consistent with an observed 19th-century decrease in Great Power wars. We also find, inter alia, that if governments are Malthus-biased (care less about Solow output), the transition can lead temporarily to more war.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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