A possible war with Iraq would have a heavy impact on the economy, says one Iowa economist. UNI economic professor David Hakes says in part it will depend on if it’s a big war or a little war.He says the short-run immediate effect is the government’s spending on the war will stimulate the economy — but a long war will mean accumulation of debt and the financial markets won’t look favorably on that, as the professor says stock prices will reflect it. So Hakes says right now we’re getting the best of both options in reaction by the markets. Hakes says right now stock prices are reflecting a longterm perspective while employment rates reflect the immediate effect of government’s involvement in a war. Using the same logic, Dr. Hakes can predict the pattern energy prices are likely to follow.He says there’ll probably be a disruption in the short run, but he says in the long run oil prices will probably fall because Iraq will be able to sell more oil once Saddam’s gone.
