The Macroeconomic Costs of Conflict

June 26, 2020

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Format: Chicago

Natalija Novta, and Evgenia Pugacheva. The Macroeconomic Costs of Conflict, (USA: International Monetary Fund, 2020) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Macroeconomic costs of conflict are generally very large, with GDP per capita about 28 percent lower ten years after conflict onset. This is overwhelmingly driven by private consumption, which falls by 25 percent ten years after conflict onset. Conflict is also associated with dramatic declines in official trade, with exports (imports) estimated to be 58 (34) percent lower ten years after conflict onset. The onset of conflict often also induces significant refugee outflows to neighboring non-advanced countries in the short run, and relatively small but very persistent refugee outflows to advanced countries over the long run. Finally, we stress that conflict should be defined in terms of the number of people killed relative to the total population. The traditional definition of conflict—based on the absolute number of deaths—skews the sample toward low-intensity conflicts in large countries, thereby understating the negative effects of conflict from a macroeconomic perspective.

Subject: Consumption, Expenditure, GDP forecasting, National accounts, Population and demographics, Private consumption, Public expenditure review

Keywords: Asylum country, Battle, Conflict, Conflict country, Conflict GDP, Conflict onset, Consumption, Country population, Country size, Country well, Destination country population, GDP decline, GDP forecasting, Global, Growth, IMF country expert, Log GDP, Middle East, Migration, Number, Number of refugee, Private consumption, Public expenditure review, Refugee, Refugee dynamics, Refugee flow, Refugee status, Sub-Saharan Africa, Trade, War, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/110
Stock No:

WPIEA2020110
ISBN:

9781513547756
ISSN:

1018-5941

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