The Economic Consequences of a War with Iraq

51 Pages Posted: 3 Dec 2002

See all articles by William D. Nordhaus

William D. Nordhaus

Yale University - Department of Economics; Cowles Foundation, Yale University; National Bureau of Economic Research (NBER)

Date Written: December 2002

Abstract

Much has been written about the national-security aspects of a potential conflict in 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: Oil, Defense Spending, War, Iraq

JEL Classification: E6, H56, Q4

Suggested Citation

Nordhaus, William D., The Economic Consequences of a War with Iraq (December 2002). Available at SSRN: https://ssrn.com/abstract=357723

William D. Nordhaus (Contact Author)

Yale University - Department of Economics ( email )

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Cowles Foundation, Yale University ( email )

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National Bureau of Economic Research (NBER)

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