Macroeconomic impacts and implications for business

Chris Varvares

Atlantic Economic Journal, 2001, vol. 29, issue 4, 364-373

Abstract: The human toll of September 11 is immeasurable. Obviously, there was lost human and physical capital, but the implications for the long-term GDP effects may not be significant with respect to reallocation of private sector capital to unproductive uses. In our model, we feel there will be a one time reduction of the capital stock in the private sector that does not have implications for productivity growth, but it will have a permanent effect on the level of productivity. Finally, higher government consumption and gross investment has a similar effect. It lowers the national savings rate, crowds out private investment, leads to capital shallowing, and lowers again the level of productivity rather than the growth of productivity. But still in present value terms, the attacks of September 11 have been a big hit to our well being. Copyright International Atlantic Economic Society 2001

Date: 2001
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DOI: 10.1007/BF02299326

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