Long Run Impact
The impact that 9/11 will have on the economy in the long run is a very difficult problem to solve. There are some cases that make it impossible to know because the effect is theoretical at this point. There are a number of aspects, however, that show that 9/11 will not have as large an effect as initially believed. According to the official report written for Congress and dated one year after the attacks, because of the events that took place on 9/11, directly after the attacks,combined with the fast and discreet response by the Federal Reserve, the threat of what had the potential to be at least a short term economic catastrophe, proved to be significantly lessened.
For there to have been a significant long term affect, the price of an important input, such as energy, would have needed to been affected or the event had to have an adverse effect on aggregate demand via such mechanisms as consumer and business confidence, a financial panic, liquidity crisis, etc. There were no panics or crises, as stated earlier, because of the quick and reassuring response of the Federal Reserve.
There are a number of predictions for the future, as a result of 9/11. Anything of great significance was reserved to the short run effects but one thing that may be affected int the future is the labor force and our country's productive capacity. The resources that could have been used to help these areas are now instead, being used for security and various defense measures.
In conclusion, 9/11 should be more appropriately viewed as a human tragedy rather than as an economic tragedy. Not to minimize the loss of human life, but the direct effects of the attacks were too small and too geographically concentrated to have any significant effect on the nation's economy.
