Copyright (c) 2009 Berkeley Electronic Press All rights reserved. http://www.bepress.com/peps Recent documents in Peace Economics, Peace Science and Public Policy en-us Fri, 20 Nov 2009 14:44:49 PST 3600 http://www.bepress.com/peps/vol15/iss1/6 http://www.bepress.com/peps/vol15/iss1/6 Fri, 20 Nov 2009 14:44:35 PST This paper reports the effect of intra- and international conflict on domestic investment in South America from 1950-2000. We combine data from the Penn World Table 6.1 and the Militarized Interstate Dispute Dataset from the Correlates of War project in a spatial investment accelerator model. We find that the magnitude of conflicts (total fatal casualties) is associated with diminished domestic investment, in magnitudes that range from 0.1 percent to one third of total investment across South America's experience in civil wars, conflicts and ethnic wars. We find no evidence of spatial spillovers in South America's civil wars. The paucity of international conflicts in the region leads us to conclude there is no more than suggestive evidence of large impacts and spatial spillovers of international conflicts. Michael J. Hicks http://www.bepress.com/peps/vol15/iss1/5 http://www.bepress.com/peps/vol15/iss1/5 Sun, 11 Oct 2009 10:52:58 PDT In many countries governments are helpless to prevent appropriation, whatever the degree of protection promised by the law. In this context, we use a simple model where workers can either work peacefully or join a guerrilla movement that expropriates entrepreneurs. We find one low-income, low-wage equilibrium with guerrilla activity and one peaceful, high-income, high-wage equilibrium. We show that the peaceful equilibrium can be reached if entrepreneurs implement standard remedies for the internal principal-agent problem such as efficiency wages. Veneta Andonova D31 D63 J31 J53 http://www.bepress.com/peps/vol15/iss1/4 http://www.bepress.com/peps/vol15/iss1/4 Sun, 09 Aug 2009 02:25:40 PDT North Korea's nuclear program is a threat to sustained stability on the Korean peninsula. Unfortunately, the traditional notion of "Atoms for Peace'' has been a failure in the engagement of the North. In this paper we propose a novel approach to mutual cooperation in energy provision on the Korean peninsula, premised on having North Korea host reactors that deliver energy to South Korea. We establish conditions where there exists a stable, time-consistent equilibrium where the North never finds it in its interest to disrupt energy supplies to the South, and where the South is willing to pay the fixed costs of nuclear plant construction in exchange for a discounted stream of energy supply from the North. We also show that third-party income streams can augment the cooperative relationship. Kyle Beardsley international cooperation peace economics game theory http://www.bepress.com/peps/vol15/iss2/9 http://www.bepress.com/peps/vol15/iss2/9 Mon, 06 Jul 2009 12:33:22 PDT Estimates of the consequences of human-made and natural disasters are crucial for informing decision making by both public and private actors. The 9/11 attack stands out as a particularly important event whose consequences need to be well understood. This study evaluates the macroeconomic impacts of the 9/11 attack on U.S. real GDP growth and the unemployment rate by examining how forecasts of these variables were revised after the attack occurred. By this approach, the immediate impact of the 9/11 attack was to reduce real GDP growth in 2001 by 0.5%, and to increase the unemployment rate by 0.11% (reduce employment by 598,000 jobs.) Results are robust to controlling for how economic forecasts typically change over the course of the forecasting horizon in normal and recession years. Impacts on 2002 outcomes are more difficult to identify. Forecasted real GDP growth in 2002 fell dramatically immediately after the 9/11 attack but then recovered fully. The recovery in the forecast could have been due to unforeseen responses that mitigated the impact of the attack, but it also could have been due to erroneous forecasting and a poor understanding of how the attack would impact the economy. The forecasted unemployment rate in 2002 rose sharply immediately after the 9/11 attack, but unlike real GDP growth, it never subsequently returned to a pre-9/11 level. Forecasters seemed to have anticipated the 2002 "jobless recovery" early in that year. Bryan W. Roberts applied microeconomics http://www.bepress.com/peps/vol15/iss2/8 http://www.bepress.com/peps/vol15/iss2/8 Mon, 06 Jul 2009 12:33:18 PDT Regional Economic Models Inc. (REMI) has developed this comprehensive study evaluating the economic impact of 9/11 on the air industry and the overall economy of New York City and the surrounding region. Using data inputs collected from a variety of sources and REMI's own Policy Insight model for the primary analysis, REMI is able to recreate economic interactions on a regional basis and simulate the economic impact of the events of 9/11. The report will quantify the economic impacts using various economic indicators, including employment, gross regional product, output, real disposable personal income, labor productivity, and population. These impacts are analyzed for New York City (separating Manhattan itself as one region and combining the four other boroughs of the city as another region) and nine other regions of the New York City Consolidated Metropolitan Area. The impacts are also shown for the rest of the USA and combined to show the results for the entire New York City Consolidated Metropolitan Area and the USA as a whole. REMI utilized their Policy Insight software to conduct this comprehensive analysis. REMI Policy Insight is a structural forecasting and policy analysis model. It integrates input-output, computable general equilibrium, econometric and economic geography methodologies. The model is dynamic, with forecasts and simulations generated on an annual basis and behavioral responses to wage, price, and other economic factors. The overall structure of the REMI model can be summarized in five major blocks: output and demand, labor and capital demand, population and labor force, wages, price, and cost, and market shares. Fred Treyz 9/11 Economic NYC Impact http://www.bepress.com/peps/vol15/iss2/7 http://www.bepress.com/peps/vol15/iss2/7 Mon, 06 Jul 2009 12:33:16 PDT We perform an empirical investigation to estimate the macroeconomic cost of September 11 attacks on the United States economy. We estimate the impact of the attacks to be approximately a 0.50 percentage point decrease in GDP growth or $60 billion. Our upper bound estimate of the impact of September 11 is approximately twice that or $125 billion. S. Brock Blomberg http://www.bepress.com/peps/vol15/iss2/6 http://www.bepress.com/peps/vol15/iss2/6 Mon, 06 Jul 2009 12:33:12 PDT It is difficult to separate the individual effects of the recession and the 9/11 attack. Within this severe constraint, the national economic impact of 9/11 appears to have been both modest and short-lived. This is supported by the sharper decline in industrial production in 2001 than in 2002. At the regional level, the impacts seem to be more in the form of regional relocational shifts (to New Jersey). The New Jersey decline in 2002 was almost certainly a recession rather than a 9/11 impact, because New Jersey gained in 2001. New York City is a little different from other spatial units because it held up better in the period preceding the 2001 recession. There are differential sectoral impacts both regionally and nationally, e.g., finance and business services vs. manufacturing. Our results show only one significant change; the effect of Finance and Insurance sector on Professional, Scientific, and Technical services. JiYoung Park http://www.bepress.com/peps/vol15/iss2/5 http://www.bepress.com/peps/vol15/iss2/5 Mon, 06 Jul 2009 12:33:08 PDT This paper is part of a collection organized by the Economic Impact Modeling Forum (EIMF) that convened in 2008 to quantify the economic impacts of the terrorist attacks of September 11, 2001 (9/11). We consider the aggregate and industry-level impacts of the event. The general equilibrium model employed features both full industrial detail and a consistent, bottom-up representation of the macroeconomy. We employ a set of primary impacts on the Manhattan financial industry and the national travel industry as identified and estimated by EIMF colleagues. These impacts are imposed on a historic baseline economy which includes the 9/11 event. The results provide an estimate of what the economy would have experienced by avoiding 9/11, including the impacts of direct business interruption to specific sectors, the secondary impacts on related industries, and the tertiary impacts across the economy. The results show that 9/11 did affect economic activity negatively over 2001 to 2003. As is typical for a macroeconomic neoclassical growth model, the aggregate impact of the conjectured shocks dissipates over time. Indeed, this model shows that historic economic activity in 2004 to 2006 may have been elevated over what would have occurred in those years had 9/11 not occurred. We argue, therefore, that the full impact on activity and income should be computed as the net impact over 2001 to 2006. We find that the net, six-year effect on real GDP is relatively minor, at about 0.3 percent of GDP of 2001. Effects on real national income and personal consumption, however, were more significant, at about 0.6 percent. Jeffrey Werling E27 D74 D58 http://www.bepress.com/peps/vol15/iss2/4 http://www.bepress.com/peps/vol15/iss2/4 Mon, 06 Jul 2009 12:33:05 PDT This paper develops a bottom-up approach that focuses on behavioral responses in estimating the total economic impacts of the September 11, 2001, World Trade Center (WTC) attacks. The estimation includes several new features. First, is the collection of data on the relocation of firms displaced by the attack, the major source of resilience in muting the direct impacts of the event. Second, is a new estimate of the major source of impacts off-site -- the ensuing decline of air travel and related tourism in the U.S. due to the social amplification of the fear of terrorism. Third, the estimation is performed for the first time using Computable General Equilibrium (CGE) analysis, including a new approach to reflecting the direct effects of external shocks. This modeling framework has many advantages in this application, such as the ability to include behavioral responses of individual businesses and households, to incorporate features of inherent and adaptive resilience at the level of the individual decision maker and the market, and to gauge quantity and price interaction effects across sectors of the regional and national economies. We find that the total business interruption losses from the WTC attacks on the U.S. economy were only slightly over $100 billion, or less than 1.0% of Gross Domestic Product. The impacts were only a loss of $14 billion of Gross Regional Product for the New York Metropolitan Area. Adam Z. Rose economics http://www.bepress.com/peps/vol15/iss2/3 http://www.bepress.com/peps/vol15/iss2/3 Mon, 06 Jul 2009 12:33:02 PDT This paper presents a summary of the overall property damage and final insured loss estimates as a result of the World Trade Center (WTC) disaster on September 11, 2001. Initial research completed at the time of the event was combined with available information since this time to develop final monetary estimates for damage to buildings and their contents, infrastructure, and cleanup costs. In addition, the insured loss as a function of property damage is presented, emphasizing the enormous impact of this event on the U.S. insurance industry. Patricia Grossi