Introduction
The paper written by Pethick Lawrence hundred and seven years ago in 1915 introduce
the first theoretical analysis of war economics modelling. Lawrence’s paper offers a
simplified explanation of the economic high price of war from a qualitative point of view.
Additionally, the same paper enumerates twelve negative economic effects of war,
including large losses in the international trade, high debts, currency depreciation,
taxation, high military expenditures, and huge inflation that can generate a slowdown in
the economic growth in the short run. In fact, the paper marks a first, valiant attempt to
apply economics to analyse the relationship between war and economic performance
(Ruiz Estrada, Park, and Kim, 2015).
Different models to evaluate the damage of war applies the cost-benefit analysis
constantly, comparative historical data, correlations, and forecasting. In this connection,
(Blattman and Miguel, 2010) explain the differential effects of war on the economic
growth. Other notable research papers pertaining to war economics include Pasvolsky,
Leo. (1942), Boden (2008), Rasler and Thompson (1985), Markusen (1992), Barro and
Lee (1994), Collier (1999), and Murdoch and Sandler (2002). A large part of these papers
is using classical models or neoclassical models. Both variants of models are based on
the analysis of basic economic variables such as government spending, production costs,
consumption, inflation, and unemployment. According to Bergsten (1990), the
unconditional relation between war and economic growth contains limited information.
For example, a lack of a relation does not necessarily imply that wars do not affect
economic performance if different types of war were associated with different patterns
and environments, and the combination of the different factors and led to a zero
unconditional effect.
According to Smith (2014), the most recent evaluations of the economic costs of war
and military conflicts are presented with a detailed examination of various research
papers. This includes works by Stiglitz and Bilmes, which highlight the financial
implications of the Iraq war for the U.S., as well as studies on other conflicts, such as
those in Afghanistan and the Basque region. These analyses employ diverse
methodologies, including accounting procedures, statistical techniques (time series,
cross-sectional, and panel data analysis), and financial assessments such as stock market
analyses.
Smith's document primarily focuses on the methodologies used to quantify the costs of
war, emphasizing the evaluation of material and human losses, albeit superficially. While
existing studies predominantly rely on analytical statistical models, they lack a
comprehensive mathematical simulator capable of capturing the full spectrum of war
dynamics—spanning pre-war, war, and post-war phases. In this context, we propose a
comprehensive and dynamic tool called the "Post-War Economic Impact Simulator (PEI-
Simulator)." This simulator aims to address the limitations of existing methodologies by
providing a holistic and systematic approach to analysing the economic impacts of war
across all stages.
The primary objective of PEI-Simulator is to evaluate an economy in times of a war.
We hope that PEI-Simulator can fill the gap in the economic modelling literature. The