The classical guns vs. butter trade-off is changing: what are the consequences of a liberalization of Swiss agriculture coupled with disar mament measures? This paper addresses these issues with the help of an empirical politico-economic model. The overall consequences are positive for Switzerland as a whole: the economy would be significantly stimulated, and these major policy changes appear politically bearable. Consumers would benefit most from the direct and indirect effects of these policies. Our scenarios postulate that the government makes large transfer payments to minimize discontent. These payments can be readily made, given the agricultural liberalization policies and a "peace dividend."
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