FEWER GUNS AND CHEAPER BUTTER - ANALYZING THE IMPACT OF DISARMAMENT AND AGRICULTURAL FREE-TRADE PRESSURES ON SWITZERLAND WITH A POLITICOECONOMIC MODEL

The classical guns vs. butter trade-off is changing: what are the cons equences of a liberalization of Swiss agriculture coupled with disarma ment measures? This paper addresses these issues with the help of an e mpirical politico-economic model. The overall consequences are positiv e for Switzerland as a whole: the economy would be significantly stimu lated, and these major policy changes appear politically bearable. Con sumers would benefit most from the direct and indirect effects of thes e policies. Our scenarios postulate that the government makes large tr ansfer payments to minimize discontent. These payments can be readily made, given the agricultural liberalization policies and a "peace divi dend."