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This paper assesses the economic effects of the July 2006 War in Lebanon. We estimate the economy-wide impacts on the Lebanese regions resulting from the reduction of physical capital stocks using the estimated damages associated with the bombing events. In doing that, we are able to derive the estimates of the short-run economic costs of the War related to the structural break in the availability of economic infrastructure in the country. A discussion on resiliency is also introduced showing how the lack of redundancy in the country’s infrastructure is associated with stronger higher-order negative effects. Moreover, we show how international trade can act as a shock absorber.

Spatial Propagation of the Economic Impacts of Bombing: The Case of the 2006 War in Lebanon