Suchergebnisse

The earlier work on the optimal design of the national security has focused on the opportunity cost of the draft in terms of foregone human capital formation. The current paper introduces the national security into the welfare analysis missing from the earlier work. This creates a trade-off between the private goods and the security as a public good in the social cost-benefit analysis. There are three major results. First, and arising from the intergenerational interaction, it is optimal to introduce a pay to the young generation when in duty even by resorting to a distortive tax. Second, when optimizing the size of the army, the optimal choice between the draft army and the professional army depends on the risk class of the country. A security gradient arises. Third, the choice is linked to the size and the quality of the reserve generated by the two approaches.

This paper shows that taxes which are understood to be neutral with respect to the marginal investment decisions may be distortionary with respect to entrepreneurial decisions. In particular, we apply an intertemporal model to show that a comprehensive income tax is distortionary unless all kinds of income are subject to the same tax rate and a worker's option to become an entrepreneur is accounted for. Similarly, the harsh condition of a uniform tax rate is necessary but not sufficient under "new view" dividend tax, cash flow tax, and ACE tax, so that the occupational choice is not distorted. In any case, informational problems may arise and lead to distortive effects.

The paper shows how entrepreneurial taxes interact with the career choice of individuals, the quality of entrepreneurs, and their effort and investments. It is particularly relevant to differentiate the early effects on start-up enterprises with substantial uncertainty from the tax effects on mature firms where the uncertainty is resolved. That is why the neutrality results of dividend taxation from mature company theory do not carry over to start-up enterprises. The Nordic dual model encourages (discourages) the establishment of new enterprises by entrepreneurs who anticipate high (low) profitability.

Abstract
The article asks whether the exercising of the NATO membership option is justified for Finland and Sweden in the light of their geopolitical state after Russia's attack on Ukraine. It was the Gallup democracy, which launched the political moves toward the membership. In both countries, the majority of people turned to favor the membership within 2–3 months. Finland activated first. Sweden was fast in catching up with the Finnish process. The theory of option pricing is employed to analyze the optimal timing of exercising the option when the uncertainty regarding the value of the membership is rapidly diluting. The Turkish intervention in the membership process after the membership applications of Finland and Sweden were delivered suggests a bargaining phase once the application is delivered. Finally, the effects of the Gallup surveys on the political equilibrium are analyzed in a voter–politician model (JEL codes: D72, D74, and H56).

Cyber technology represents digital military capability with the purpose of causing damage to the military strength and the social infrastructure of a potential enemy. War using conventional weapons may be preceded by or combined with a war using cyber technology. This paper introduces such technology into the theory of conflicts, suggesting the striking proposal that the expected return on cyber investment is convex. It is shown that an asymmetric successful cyber program results in an option for a pre-emptive cyber attack. These features of the model make the cyber technology a first-ranked military investment. The optimal scale of a cyber program of a country expected to have access to a superior cyber capability is derived. It is shown that the asymmetric cyber capability reduces the international arms race but nevertheless raises the likelihood of a war reducing the deterrence.