Working Paper: NBER ID: w9361
Authors: William D. Nordhaus
Abstract: Much has been written about the national-security aspects of a potential conflict with 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: war costs; Iraq; economic consequences; military conflict
JEL Codes: H560
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| military conflicts (D74) | economic repercussions (F69) |
| initiation of military action (H56) | economic repercussions (F69) |
| costs of a conflict with Iraq (H56) | economic impact (F69) |
| military actions (H56) | increased oil prices (Q31) |
| military actions (H56) | potential recession (F44) |