The Tradeoff Between Consumption and Military Expenditures for the Soviet Union During the 1980s

This study develops a relatively new approach to the modeling of the Soviet economy that uses optimal control theory. The resulting Hopkins-Kennedy optimal control model is used to address the primary research question of the study: What will be the tradeoff between Soviet consumption and defense spending during the 1980s? Section II is devoted to the model. Its strength is indicated by a number of historical scenarios in Sec. III in which the model makes predictions which can be checked against what actually occurred. Section IV examines the implications of an alternative view of Soviet economic history, put forth by Rosefielde and Lee. Section V examines demographic change, in terms of both growth of the labor force and its ethnic composition. The impact of differing rates of productivity growth and a scenario in which poor weather continues into the next decade are studied in Sec. VI. Section VII describes the impact of the increasing cost of energy. Foreign trade, which is likely to play a central role in the Soviet economy in the next decade, is examined in detail in Sec. VIII. Section IX compares a best case and a worse case scenario.