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The Price of War

Jonathan Federle¹; André Meier²; Gernot J. Müller³; Willi Mutschler⁴; Moritz Schularick⁵

¹ Kiel Institute (email: ) · ² Tudor Capital Europe LLP (email: ) · ³ Department of Economics, University of Tübingen, CEPR, and CESifo (email: ) · ⁴ Department of Economics, University of Tübingen, and Dynare Team (email: ) · ⁵ Kiel Institute, Sciences Po, and CEPR (email: )

We assemble a new dataset spanning 150 years and 60 countries to study the economic toll of war. A war of average intensity is associated with an output drop of close to 10 percent in the war-site economy, while consumer prices rise by approximately 20 percent. The capital stock, total factor productivity, and equity returns all decline sharply. The economic ramifications of war are not confined to the war site. The evidence points to adverse economic outcomes in other belligerent and third-party countries if they are exposed to the war site through trade linkages or share a common border. (JEL D74, E23, E32, F43, F51, N40)

DOI

10.1257/aer.20241355

Volume

116 (3)

Pages

791-827

Language

en

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BibTeX

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