Assessing the Effects of the Terrorist Attacks on the U.S. Economy

Hubert Strauß

No 1077, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The terrorist attacks of September 11 have challenged the view that the U.S. economy is on the brink of recovery. This article discusses the effects of the attacks on real GDP taking the Kiel Institute's forecast of September 10 as the baseline scenario. The focus is on assessing the direct production losses in the week of September 10?16. Anecdotal evidence is combined with economic reasoning (on the non storability of services, the role of air transports and on the complementarity between services). As to the indirect effects, I assume that the downturn in sentiment will be severe but short-lived. Under the technical assumption of a stabilizing political situation economic activity in 2002 will recover more vigorously than previously thought due to postponed purchases and a more expansionary stance of economic policies.

Keywords: Business Cycle; U.S. economy; terrorist attacks; air transportation; services (search for similar items in EconPapers)
JEL-codes: E32 E37 L80 L93 (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1077

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