September 24, 2010

War! What is it Good For?

  • Noel D. Johnson

    Senior Research Fellow
  • Steven Yamarik

    Professor of Economics, California State University in Long Beach
  • Ryan A. Compton

    Visiting Assistant Professor of Economics, University of Western Ontario

Whatever gains may come from fighting wars, economic growth is not among them.  This paper examines the long-run impact of interstate conflict on real GDP per capita for a cross section of countries between 1960 and 2000.  The authors construct a fatality-weighted conflict variable that accounts for both the severity and endogeneity of individual confrontations.  The model developed includes the authors' conflict measure in a deep determinants income regression in which we control for trade, institutions and geography.  The paper finds that a 10 percent increase in fatality-weighted conflict over the period 1960 to 2000 results in an average decrease of 1.2 to 1.6 percent in 2000 real GDP per capita.

 Download the full article from The Berkeley Electronic Press.