In my Birthright game, there is a limit on domestic troops. If you look
at the CIA's World Factbook. There is a description of the population
of different nations: divided by age, sex and suitability for military
service. Most populations have 50% to 70% of their population between
the ages of 15 and 49. Of this population, roughly half are male. Of
25-35% of the population, many are unfit for military service. The CIA
most countries as having 50-66% of the adult male population as fit for
military service. So, around twenty percent of your total population
eligible for the armed services.

This twenty percent of the population is also mostly responsible for
your economic and agricultural production. Today women and elderly
citizens play a large role in society, but in the Middle Ages the
very physical nature of the economy meant that there were very few
women blacksmiths, wainwrights or teamsters. So for every troop a
regent puts in the field, there is one less man behind a plow.

The above web-site is a US government one, detailing the expenditures
and size of different militarys around the world. The US has roughly
5% of its population in the military. The highest, most militarized
nations are in the high teens. These same nations tend to be repressive
regimes that have excessive taxation to support the military. The
domestic economy suffers severly from the shortage of manpower and
the excessive taxes needed to support these war machines.

A large standing body of troops is also a fertile breeding ground for
dissent. Look at the most recent rash of coups in Africa. If a ruler
is intent on keeping a large standing force, she should be aware that
there are serious costs to pay. I set the limit at ten percent of the
population in the military, without suffering any side-effects. Every
percent over that increases the likelihood of domestic disturbance or
military coup. I also decrease Guilder profits if the military is over
ten percent of the total population. Guilders are forced to import
supplies that are in demand because of labor shortages, workers are
also in short supply and can command higher wages. I generally lower
the effective level of the province by one (for the determiniation of
profits) for every five percent of the population in the military over
the basic ten percent level.