The Allocative Cost of War

13 Sep 2026 Leave a comment

by Jim Rose in applied price theory, defence economics, war and peace Tags:

Why is war so economically costly? Our answer is that modern war lowers output not only by destroying productive factors, but also by making the surviving economy work less efficiently. Using uniquely comprehensive firm-level data collected during Russia’s full-scale invasion of Ukraine in 2022, we document a dramatic collapse in allocative productivity in Ukraine. To…

The Allocative Cost of War

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