The Opportunity Cost of Conflict: Statistically Comparing Israel and Synthetic Israel

Political Science Research and Methods, Vol. 3, No. 3, pp. 609-618, September 2015

33 Pages Posted: 9 Jan 2014 Last revised: 28 Sep 2017

See all articles by Yusaku Horiuchi

Yusaku Horiuchi

Dartmouth College - Department of Government

Asher Mayerson

Dartmouth College

Date Written: September 3, 2014

Abstract

What would Israel’s economy have looked like without the 2000 Palestinian Intifada? We examine this counterfactual question by statistically comparing economic growth trajectories of Israel and a “synthetic” Israel, which we construct by applying a method proposed by Abadie and Gardeazabal (2003) and Abadie, Diamond, and Hainmueller (2010; 2014). We find that per capita Gross Domestic Product (GDP) of Israel during the Second Intifada was reduced by an average of about 2,003 U.S. dollars per year (in 2005 U.S. dollars). This amounts to about 8.6% of the 2000 baseline level. In the case of the Second Intifada, the opportunity cost of conflict was indeed substantial and significant.

Keywords: economic growth, cost of conflict, Israel, synthetic control

JEL Classification: D74, H56, N15, N45, O53

Suggested Citation

Horiuchi, Yusaku and Mayerson, Asher, The Opportunity Cost of Conflict: Statistically Comparing Israel and Synthetic Israel (September 3, 2014). Political Science Research and Methods, Vol. 3, No. 3, pp. 609-618, September 2015. Available at SSRN: https://ssrn.com/abstract=2376032 or http://dx.doi.org/10.2139/ssrn.2376032

Yusaku Horiuchi (Contact Author)

Dartmouth College - Department of Government ( email )

204 Silsby Hall
HB 6108
Hanover, NH 03755
United States

HOME PAGE: http://sites.dartmouth.edu/horiuchi/

Asher Mayerson

Dartmouth College ( email )

Department of Sociology
Hanover, NH 03755
United States

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