IDEAS home Printed from https://ideas.repec.org/p/bge/wpaper/1465.html
   My bibliography  Save this paper

“If You Only Have a Hammer”: Optimal Dynamic Prevention Policy

Author

Listed:
  • Hannes Mueller
  • Christopher Rauh
  • Alessandro Ruggieri
  • Ben Seimon

Abstract

We study the gains of improving forecasting when a policymaker is facing a recurring risk and has the choice between a preventive early action and a de-escalating late action. We first introduce a simple two-stage Markov model to illustrate how prevention and de-escalation interact. We then study the role of forecasting for optimal armed conflict prevention in a 12-stage model which is calibrated using a large cross-country panel. Prevention benefits are substantial but critically depend on the systematic use of forecasting. The information rent of using a forecast is larger than 60% of GDP. In line with the theory we find that de-escalation policies reduce the incentives for prevention, whereas prevention increases incentives for de-escalation.

Suggested Citation

  • Hannes Mueller & Christopher Rauh & Alessandro Ruggieri & Ben Seimon, 2024. "“If You Only Have a Hammer”: Optimal Dynamic Prevention Policy," Working Papers 1465, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1465
    as

    Download full text from publisher

    File URL: https://bse.eu/sites/default/files/working_paper_pdfs/1465_0.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    armed conflict; machine learning; prevention; dynamic optimization; information gain;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • F1 - International Economics - - Trade
    • L8 - Industrial Organization - - Industry Studies: Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:1465. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bruno Guallar (email available below). General contact details of provider: https://edirc.repec.org/data/bargses.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.