Book chapter
Анализ стабилизационной политики Банка России в 2008 – 2009 гг. в модели общего равновесия
In book
This paper develops a quantitative model of trade, military con icts, and defense spending. Trade liberalization between two countries reduces probability of an armed con ict between them, causing both to cut defense spending. This in turn causes a domino e ect on defense spending by other countries. As a result, both countries and the rest of the world are better o . We estimate the model using data on trade, con icts, and military spending. We nd that, after reduction of costs of trade between a pair of hostile countries, the welfare e ect of worldwide defense spending cuts is comparable in magnitude to the direct welfare gains from trade.
The Strategic Market Game (SMG) is the general equilibrium mechanism of strategic reallocation of resources. It was suggested by Shapley and Shubik in a series of papers in the 70s and it is one of the fundamentals of contemporary monetary macroeconomics with endogenous demand for money. This survey highlights features of the SMG and some of the most important current applications of SMGs, especially for monetary macroeconomic analysis.