TY  - RPRT
A1  - Eydam, Ulrich
A1  - Leupold, Florian
T1  - What is it good for?
BT  - On the Inflationary Effects of Military Conflicts
T2  - CEPA Discussion Papers
N2  - Military conflicts and wars affect a country’s development in various dimensions. Rising inflation rates are a potentially important economic effect associated with conflict. High inflation can undermine investment, weigh on private consumption, and threaten macroeconomic stability. Furthermore, these effects are not necessarily restricted to the locality of the conflict, but can also spill over to other countries. Therefore, to understand how conflict affects the economy and to make a more comprehensive assessment of the costs of armed conflict, it is important to take inflationary effects into account. To disentangle the conflict-inflation-nexus and to quantify this relationship, we conduct a panel analysis for 175 countries over the period 1950–2019. To capture indirect inflationary effects, we construct a distance based spillover index. In general, the results of our analysis confirm a statistically significant positive direct association between conflicts and inflation rates. This finding is robust across various model specifications. Moreover, our results indicate that conflict induced inflation is not solely driven by increasing money supply. Furthermore, we document a statistically significant positive indirect association between conflicts and inflation rates in uninvolved countries.
T3  - CEPA Discussion Papers - 65 
KW  - inflation
KW  - wars
KW  - military conflicts
KW  - spillover effects
KW  - dynamic panel estimation
Y1  - 2023
U6  - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-597966
SN  - 2628-653X
IS  - 65
ER  -