In general, the inter-temporal budget constraint undergoes significant related to the economic impa

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In economics, if the war is a cost, it can not be summarized in this one aspect. Indeed, the mechanisms by which war affects the economy is not limited to the cost estimate for the private and public sectors. unex In this context, assessing the economic impact of war presupposes that are taken into account the changes of the parameters that govern the development of individual choice. Although it can not be limited to this single dimension, the analysis of the war in terms of public finance serves to emphasize that the economic consequences of war refers to the concepts of risk and uncertainty.
The war is generally considered disruptive to the economy. Indeed, it subjects the economy to major shocks and heavy stresses that peace does not know. Without unex going into detail, it should be remembered that the war is likely to affect the economy as a whole and the behavior of economic agents in particular, especially unex when there is a change in the budget constraint of the state.
In general, the inter-temporal budget constraint undergoes significant related to the economic impact of the war changes. Logically, in wartime, the government must provide financial effort that will result in an increase in military spending, possibly at the expense of the civil expenditure: unex it is the "war effort". In the case of a reduction in civil expenses as a direct result is a lower provision of public services that can dampen economic activity in the short and medium term. The increase in investment demand military also has a negative effect on the production of consumer goods and private investment. In other words, the production unex of consumer goods and private investment will be reduced by the war effort, especially as the conscription diverts part of the workforce unex and introduced unex tensions in the labor market. To this must be added the destruction of productive potential and its disruption (transport, communication ...) device. In the end, the conditions that underpin the supply, that is to say domestic production, are strongly affected.
Demand, that is to say consumption is also seeing the effects of the war effort. Indeed, as private investment and consumption tend to be reduced due to increased taxes and increased savings (for the purchase of war especially good) call: it is the effect of eviction of public debt in practice where government spending crowds out private spending. For the government, even though the tax rate may be increased, it remains less than the tax base (the sum of income and taxable income) may be significantly reduced. So there is a simultaneous movement of increasing public expenditure (mainly military) and reduction of fiscal resources (in this respect, the disorganization of the administration may also reduce the efficiency of the apparatus of tax collection ). The budget constraint becomes tighter and the borrowing and money creation is essential.
Ultimately, all the parameters that affect the financial conditions of the war effort tend to harden the budget constraint. However, this is not counting on the uncertainty generated by the war on maintaining a balanced budget.
Beyond the direct economic impact unex of the war, it is also necessary to take into account an essential dimension in the economic calculation agents: uncertainty. Because of the war, the economic decision environment is particularly unstable. In other words, any decision on the flat spectrum of risk assoc