Kiel Working Papers, Kiel Institute for World Economics
No 1077:
Assessing the Effects of the Terrorist Attacks on the U.S. Economy
Hubert Strauß
Abstract: The terrorist attacks of September 11 have challenged the
view that the U.S. economy is on the brink of recovery. This article
discusses the effects of the attacks on real GDP taking the Kiel
InstituteÂ’s forecast of September 10 as the baseline scenario. The focus
is on assessing the direct production losses in the week of September
10–16. Anecdotal evidence is combined with economic reasoning (on the non
storability of services, the role of air transports and on the
complementarity between services). As to the indirect effects, I assume
that the downturn in sentiment will be severe but short-lived. Under the
technical assumption of a stabilizing political situation economic activity
in 2002 will recover more vigorously than previously thought due to
postponed purchases and a more expansionary stance of economic policies.
Keywords: Business Cycle, U.S. economy, terrorist attacks, air transportation, services; (follow links to similar papers)
JEL-Codes: E32; E37; L80; L93; (follow links to similar papers)
17 pages, September 2001
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