The Endogenous Nature of War and Its Economic Consequences

38 Pages Posted: 25 Jun 2024

See all articles by Jordan Adamson

Jordan Adamson

Leipzig University, Institute for Empirical Research in Economics

Daniel Stephenson

Virginia Commonwealth University - School of Business - Department of Economics

Date Written: June 18, 2024

Abstract

Macrohistorical theories of development often depict war as positively affecting the economy. Yet these theories, and the supporting evidence, assume that war is an exogenous shock. After revisiting the raw data in Europe, we suppose instead that war is endogenous and create a model of how different populations of producers, attackers, and defenders co-evolve. We then investigate what typical statistical analyses estimate with data generated from our model. Unfortunately, these statistical analyses typically suggest war positively affects the economy when in fact it is harmful. We caution against "mostly harmless" econometrics that suggest European prosperity comes from its violent past rather than its peaceful present.

Keywords: war economy, historical dynamics, mostly-harmless econometrics JEL Classification:

Suggested Citation

Adamson, Jordan and Stephenson, Daniel, The Endogenous Nature of War and Its Economic Consequences (June 18, 2024). Available at SSRN: https://ssrn.com/abstract=4869123 or http://dx.doi.org/10.2139/ssrn.4869123

Jordan Adamson (Contact Author)

Leipzig University, Institute for Empirical Research in Economics ( email )

Grimmaische Str. 12
Leipzig, 04109
Germany

Daniel Stephenson

Virginia Commonwealth University - School of Business - Department of Economics ( email )

Box 844000
Richmond, VA 23284-4000
United States

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