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Macroeconomic Effects of the War in Mozambique -

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  • Tilman Brück

Abstract

The aim of this paper is to analyse some macroeconomic channels operating in a war economy. At the theoretical level, the effects of such war on the key economic variables capital, technology, uncertainty, and the government's fiscal deficit are discussed before proceeding to the analysis of individuals, firms and the government. These elements are combined in a dynamic macroeconomic model to study a war's impact on output, growth, consumption, welfare and the national debt. The final section of this paper considers economic policy implications for a government at war, and for donors supporting a war economy. Both the theory and the evidence, drawn from Mozambique, suggest that while capital destruction is the most obvious cost of conflict the long-term development potential of a war economy is more severely damaged by increases in the fiscal deficit, uncertainty and transactions inefficiency. Furthermore, economic policies implemented during a war will determine the size and nature of the country's long-term peace dividend.

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  • Tilman Brück, "undated". "Macroeconomic Effects of the War in Mozambique -," QEH Working Papers qehwps11, Queen Elizabeth House, University of Oxford.
    • Handle: RePEc:qeh:qehwps:qehwps11
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    File URL: http://workingpapers.qeh.ox.ac.uk/RePEc/qeh/qehwps/qehwps11.pdf
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    References listed on IDEAS

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    2. Azam, Jean-Paul & Bevan, David & Collier, Paul & Dercon, Stefan & Gunning, Jan & Pradhan, Sanjay, 1995. "Some economic consequences of the transition from civil war to peace," Policy Research Working Paper Series 1392, The World Bank.
    3. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    4. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, April.
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    Cited by:

    1. He Yin & Van Butsic & Johanna Buchner & Tobias Kuemmerle & Alexander V. Prishchepov & Matthias Baumann & Eugenia V. Bragina & Hovik Sayadyan & Volker C. Radeloff, 2019. "Agricultural abandonment and recultivation during and after the Chechen Wars in the northern Caucasus," HiCN Working Papers 294, Households in Conflict Network.
    2. Marc Vothknecht & Sudarno Sumarto, 2011. "Beyond the Overall Economic Downturn: Evidence on Sector-Specific Effects of Violent Conflict from Indonesia," Discussion Papers of DIW Berlin 1105, DIW Berlin, German Institute for Economic Research.
    3. Andrew L. Dabaleno & Saumik Paul, 2012. "Estimating the Causal Effects of War on Education in C�te D�Ivoire," HiCN Working Papers 120, Households in Conflict Network.
    4. Mr. John C Bluedorn & Rupa Duttagupta & Mr. Jaime Guajardo & Miss Nkunde Mwase, 2013. "The Growth Comeback in Developing Economies: A New Hope or Back to the Future?," IMF Working Papers 2013/132, International Monetary Fund.
    5. Yamada, Hiroyuki & Matsushima, Midori, 2020. "Impacts of long-lasting civil conflicts on education: Evidence from the 2014 Census of Myanmar," Journal of Asian Economics, Elsevier, vol. 71(C).
    6. Andrew L. Dabalen & Saumik Paul, 2014. "Estimating the Effects of Conflict on Education in Côte d'Ivoire," Journal of Development Studies, Taylor & Francis Journals, vol. 50(12), pages 1631-1646, December.
    7. Channing Arndt & Sam Jones & Finn Tarp, 2006. "Aid and Development: The Mozambican Case," Discussion Papers 06-13, University of Copenhagen. Department of Economics.
    8. Gadong Toma Dalyop, 2017. "Determinants of Fiscal Deficit in Conflict-affected States in Africa," International Journal of Economic Policy Studies, Springer, vol. 12(1), pages 69-95, January.
    9. Patricia Justino, 2009. "The Impact of Armed Civil Conflict on Household Welfare and Policy Responses," Research Working Papers 12, MICROCON - A Micro Level Analysis of Violent Conflict.
    10. Gadong Toma Dalyop, 2019. "Political instability and economic growth in Africa," International Journal of Economic Policy Studies, Springer, vol. 13(1), pages 217-257, January.
    11. Patricia Justino, 2006. "On the Links between Violent Conflict and Chronic Poverty: How Much Do We Really Know?," HiCN Working Papers 18, Households in Conflict Network.

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