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Episodes of War and Peace in an Estimated Open Economy Model

Abstract : We analyze the effects of world wars on the macroeconomic dynamics of the U.S., France, Germany, and the UK, by means of an estimated open-economy model. The model allows wars to affect the economy through capital depreciation, sovereign default, a military draft, household preferences, and spillovers on other exogenous processes (productivity, investment, trade, policy variables). If the bulk of fluctuations during war episodes can be explained by the rise in government spending in the U.S., other factors are crucial in other countries. We also discuss the size and state-dependence of public spending multipliers, and a counterfactual welfare exercise.
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Submitted on : Tuesday, February 14, 2017 - 11:19:44 AM
Last modification on : Thursday, April 30, 2020 - 3:12:06 PM
Long-term archiving on: : Monday, May 15, 2017 - 1:36:40 PM


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  • HAL Id : halshs-01467219, version 1


Stéphane Auray, Aurélien Eyquem. Episodes of War and Peace in an Estimated Open Economy Model. 2017. ⟨halshs-01467219⟩



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