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  • Seminar,

Mathieu Couttenier (ENS Lyon, GATE)

Published on October 13, 2022 – Updated on December 1, 2022
Date
Le 06 December 2022 De 12:30 à 13:30
Location
Pôle Tertiaire - Site La Rotonde - 26 avenue Léon Blum - 63000 Clermont-Ferrand. Salle 212

Research seminar. The Economic Costs of Conflict: a Production Network Approach

The Economic Costs of Conflict: a Production Network Approach

Co-authors : Nathalie Monnet (Federal Statistical Office in Neuchâtel) and Lavinia Piemontese (University Bocconi)

Abstract

A novel approach is presented for estimating the economic costs of conflict, in which the production network serves a first-order mechanism through which the disruptive effect of localized conflict spreads to firms in peaceful areas. The method is applied to the Maoist insurgency in Eastern India during the period 2000-2009. We document the negative impact of conflict on firms' behavior, which spreads to firms in peaceful areas through input-output connections. We then apply a model of production networks in order to quantify the overall impact of conflict by taking these propagation effects into account. We find that the Maoist insurgency results in an average aggregate output loss of 3.8 billion USD per year. Interestingly, 73% of the loss is explained by network propagation.