The economic impact of war with Iraq asymmetric risks

iea Introduction Concern about war between some Western countries and Iraq has mounted in recent weeks. War with Iraq may have important economic consequences as well as political and security-related consequences. First-order consequences might include increased oil prices and also higher defence expenditure at a time when it appears that tax revenues will be rising much more slowly than government spending. There will also be second order consequences. These will depend on the outcome of war and on whether war achieves its objective of bringing peace and stability to the region or, in fact, makes the region less stable.