Militarization and Capital Accumulation: A Mean Field Game of Symmetric Nations under Strategic Externalities

Heng-Fu Zou ()

No 761, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: This paper develops a dynamic mean field game model of capital accumulation and militarization among symmetric countries facing stochastic shocks. Each country optimizes consumption, productive investment, and military spending while responding to the average militarization level of others. We derive the coupled Hamilton-Jacobi-Bellman and Fokker- Planck equations governing equilibrium, and prove existence and unique ness under strategic externalities. A linear-quadratic-Gaussian version yields closed-form feedback rules and forward dynamics. Simulations reveal that low internalization of global militarization leads to arms traps and stagnation, while stronger externality awareness supports growth and restraint. The model offers a rigorous framework to study decentralized security dilemmas and their macroeconomic consequences without assuming hierarchy or conflict.

Keywords: Mean Field Games; Militarization; Strategic Externalities; Capital Accumulation; Arms Race (search for similar items in EconPapers)
Pages: 17 pages
Date: 2025-05-03
New Economics Papers: this item is included in nep-gth
References: Add references at CitEc
Citations:

Downloads: (external link)
https://down.aefweb.net/WorkingPapers/w761.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:761

Access Statistics for this paper

More papers in CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Qiang Gao ().