Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of San Francisco
Working Paper Series
Collateral damage: trade disruption and the economic impact of war
Reuven Glick
Alan M. Taylor

Conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity, especially international trade. Yet nothing is known empirically about these effects in large samples. We study the effects of war on bilateral trade for almost all countries with available data extending back to 1870. Using the gravity model, we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals, controlling for other determinants of trade. We find large and persistent impacts of wars on trade, and hence on national and global economic welfare. A rough accounting indicates that such costs might be of the same order of magnitude as the “direct” costs of war, such as lost human capital, as illustrated by case studies of World War I and World War II.

Download Full text
Cite this item
Reuven Glick & Alan M. Taylor, Collateral damage: trade disruption and the economic impact of war, Federal Reserve Bank of San Francisco, Working Paper Series 2005-11, 2005.
More from this series
JEL Classification:
Subject headings:
Keywords: War - Economic aspects ; International trade
For corrections, contact Federal Reserve Bank of San Francisco Research Library ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal