The Economic Consequences of a War with Iraq

William D. Nordhaus ()

No 1387, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: Much has been written about the national-security aspects of a potential conflict in Iraq, but there are no studies of the cost. A review of several past wars indicates that nations historically have consistently underestimated the cost of military conflicts. This study reviews the potential costs of a conflict including the postwar expenses that might be required for occupation, humanitarian assistance, reconstruction, nation-building, along with the implications for oil markets and macroeconomic activity. It considers two potential scenarios that span the potential outcomes, ranging from a short and relatively conflict-free case to protracted conflict with difficult and expensive postwar reconstruction and occupation. The estimates of the cost to the United States over the decade following hostilities range from $100 billion to $1.9 trillion.

Keywords: Oil; Defense spending; War; Iraq (search for similar items in EconPapers)
JEL-codes: E6 H56 Q4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-his
Date: 2002-12
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Persistent link: http://EconPapers.repec.org/RePEc:cwl:cwldpp:1387

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