The Macroeconomic Costs of Conflict
IMF Working Papers, June 26, 2020
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- Authors: Natalija Novta, Evgenia Pugacheva
- Published: June 26, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513547756.001
Macroeconomic impacts on GDP and consumption
- GDP per capita is about 28 percent lower ten years after conflict onset.
- Private consumption falls by 25 percent ten years after conflict onset and overwhelmingly drives the GDP per capita decline.
Trade effects
- Exports are estimated to be 58 percent lower ten years after conflict onset.
- Imports are estimated to be 34 percent lower ten years after conflict onset.
- Official trade experiences dramatic declines associated with conflict onset.
Refugee dynamics
- Conflict onset often induces significant refugee outflows to neighboring non-advanced countries in the short run.
- Conflict onset leads to relatively small but very persistent refugee outflows to advanced countries over the long run.
Measurement and sample-definition considerations
- Conflict should be defined in terms of the number of people killed relative to the total population.
- The traditional definition of conflict—based on the absolute number of deaths—skews the sample toward low-intensity conflicts in large countries, thereby understating the negative effects of conflict from a macroeconomic perspective.
IMF Working Paper by Natalija Novta and Evgenia Pugacheva, June 26, 2020 (Working Paper No. 2020/110).
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