Wednesday November 28, 3:14 PM
Economic effects of Sept 11 overstated: economist
The impact of the September 11 terror attacks on the global economy has been overstated, according to a leading US economist.
sg.biz.yahoo.com
Paul Krugman, professor of economics and international affairs at Princeton University, said the economic effects of the attacks and subsequent war in Afghanistan were not significant.
"I just think we're going to look back in a couple of years, maybe sooner than that, and say... 'what a small event that was in terms of the economy for us to get so worked up about it'," Krugman told journalists on the sidelines of a Pacific Economic Cooperation Council (PECC) conference in Hong Kong.
"Overwhelmingly, if there are effects they're psychological," he said
He said the fallout of the September 11 attacks affected the global economy by higher costs such as military spending, economic friction and psychological effects.
Krugman said the higher cost of resources following the attacks had been "absolutely trivial" at around one billion dollars a month, or about 0.5 percent of the federal US budget.
The friction costs included factors such as the delays caused by increased security checks at airports and factors such as people being afraid to fly.
"That may (have a larger effect), but I think that's transitory. I think in a couple of months that will be smoothed out," Krugman said.
The psychological impact seemed to be less serious than originally expected, with US retail sales looking positive and consumer confidence mixed.
The PECC, founded in 1980 and with a current membership of 25 countries, is a non-governmental regional economic forum.
This week's biennial general meeting has brought together 1,000 business leaders, senior government officials and academics. |
