The Economic Consequences of War

The Economic Consequences of War on the US Economy, released by the Institute for Economics and Peace, analyses the macroeconomic effects of US government spending on wars and the military.

The report studies five periods – World War II, the Korean War, the Vietnam War, the Cold War, and the Afghanistan/Iraq wars – exposing the effect of war financing on debt, consumption, investment, jobs, taxes, government deficits, and inflation.

The findings of the report show devastating trends for US tax, debt and deficit debates. Key findings include: The U.S. has paid for its wars either through debt [World War II, Cold War, Afghanistan/Iraq], taxation [Korean War] or inflation [Vietnam].

In each case, taxpayers have been burdened, and private sector consumption and investment have been constrained as a result.

The report shows the following economic indicators experiencing negative effects either during or after the conflicts:


The report also shows that the higher levels of government spending associated with war tends to generate some positive economic benefits in the short-term, specifically through increases in economic growth occurring during conflict spending booms.

However, negative unintended consequences occur either concurrently with the war or develop as residual effects afterwards thereby harming the economy over the longer term.


Related Articles

Gun Violence

In the US two out of three homicides are caused by guns, compared to only one in 13 in the UK.

Contact us

Vision of Humanity is an initiative of the Institute for Economics and Peace (IEP). IEP have offices in New York and Sydney. For more specific inquiries related to the peace indexes and research, please contact IEP directly.

General enquiries:
Data request:

Sydney office

PO Box 42, St Leonards,
NSW 1590,
Tel: +61 2 9901 8500

New York office

3 East 54th Street
14th Floor
New York, New York 10022
Tel: +1 (646) 963-2160

Job opportunities and internships are listed on the Institute for Economics and Peace website. See them here.

Contact us