The Price of War

American Economic Review 2026

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Authors: Jonathan Federle, André Meier, Gernot J. Müller, Willi Mutschler, Moritz Schularick
DOI: 10.1257/aer.20241355
Cited by: 12
References: 77

Abstract

We assemble a new dataset spanning 150 years and 60 countries to study the economic toll of war. A war of average intensity is associated with an output drop of close to 10 percent in the war-site economy, while consumer prices rise by approximately 20 percent. The capital stock, total factor productivity, and equity returns all decline sharply. The economic ramifications of war are not confined to the war site. The evidence points to adverse economic outcomes in other belligerent and third-party countries if they are exposed to the war site through trade linkages or share a common border. (JEL D74, E23, E32, F43, F51, N40)

Fields of Study & Subjects

Defense Military and Policy Studies Politics Economics and Education Policy Economic Sanctions and International Relations

Publication details

Journal / source
American Economic Review
Publisher
American Economic Association
Volume
116
Issue
3
Pages
791–827
Publication date
27 February 2026
Language
EN