Collateral Damage: Trade Disruption and the Economic Impact of War

Alan Taylor and Reuven Glick

No 5209, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity, especially international trade. Yet nothing is known empirically about these effects in large samples. We study the effects of war on bilateral trade for almost all countries with available data extending back to 1870. Using the gravity model, we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals, controlling for other determinants of trade. We find large and persistent impacts of wars on trade, and hence on national and global economic welfare. A rough accounting indicates that such costs might be of the same order of magnitude as the "direct" costs of war, such as lost human capital, as illustrated by case studies of World War I and World War II.

Keywords: Peace; Conflict; Gravity model; World war i; World war ii (search for similar items in EconPapers)
JEL-codes: D74 F02 F10 F14 H56 N40 N70 (search for similar items in EconPapers)
Date: 2005-09
New Economics Papers: this item is included in nep-his and nep-pbe
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Citations: View citations in EconPapers (29)

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Related works:
Working Paper: Collateral Damage: Trade Disruption and the Economic Impact of War (2005)
Working Paper: Collateral damage: trade disruption and the economic impact of war (2005)
Working Paper: Collateral Damage: Trade Disruption and the Economic Impact of War (2005)
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