size of the economy. However, there are substantial differences between the linear and GE solutions for Iraq and Syria, where the shocks are large, giving rise to large changes. The pure sectoral output effects are large in Syria mostly because of the direct war shocks and in Iraq mostly because of the failed trade integration.

**Table 7 Pure GE Effects of War and Trade Disintegration in the Levant**

||Turkey<br>|Egypt<br>J<br>Di|ordan<br>L<br>rect war|ebanon<br>effects|Syria|Iraq<br>T|urkey|Egypt <br>Trade|Jordan<br>L<br>disintegr|ebanon<br>ation eff|Syria<br>ects|Iraq<br>|Turkey<br>Direct|Egypt<br>war and|Jordan L<br>trade di|ebanon <br>sintegra|Syria<br>tion eff|Iraq<br>ects|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Per capita welfare (%)|0.0|0.0|0.1|**2.1**|**-2.5**|1.9|-0.1|-1.1|-0.7|0.1|-1.2|**-2.7**|0.0|-1.1|-0.6|**2.3**|**-4.1**|-1.3|
|Aggregate welfare (US$ m.)|193|1|4|-82|488|11|-334|-1208|-127|-29|-53|-498|-140|-1207|-123|-111|435|-487|
|Real land prices (%)|0.1|0.0|0.5|1.5|**30.7**|**-2.9**|-0.2|-1.6|**17.0**|-0.9|**7.2**|**-11.0**|-0.1|-1.6|**18.6**|0.9|**36.3**|**-15.6**|
|Real unskilled wages (%)|0.1|0.0|0.1|1.3|-1.0|**3.7**|0.1|-0.5|-0.8|0.0|-0.6|-0.6|0.1|-0.6|-0.6|1.4|-1.8|**3.1**|
|Real skilled wages (%)|0.1|0.0|0.2|1.8|-1.5|**3.9**|0.0|-0.8|-0.8|0.1|-0.7|-1.1|0.0|-0.8|-0.6|2.0|**-2.4**|**3.0**|
|Real capital rental rates (%)|0.0|0.0|0.0|-0.5|**-2.7**|0.7|0.0|-0.6|-0.9|-0.3|-0.9|-0.3|0.0|-0.6|-0.9|-0.8|**-3.7**|0.4|
|Real resource rents (%)|-0.4|-0.2|0.2|**1.6**|**-8.1**|**-1.9**|-1.0|**-3.7**|**-2.7**|**2.4**|1.4|**-7.8**|-1.4|**-3.9**|**-2.4**|**3.6**|**-8.8**|**-9.2**|
|Sectoral outputs (%)|||||||||||||||||||
|Primary agriculture|0.0|0.0|0.1|-0.6|**2.7**|-0.8|0.0|-0.6|**2.3**|0.0|-0.3|**-3.2**|0.0|-0.6|**2.4**|-0.6|**2.3**|**-4.1**|
|Processed food|0.0|0.0|-0.1|-0.5|0.8|-1.6|0.2|1.3|**-2.8**|-0.3|-0.8|**-8.7**|0.2|1.4|**-2.8**|-0.7|0.0|**-10.2**|
|Gas extraction & distr.|-0.3|0.0|-0.2|-0.8|**12.1**|-0.5|-0.6|-0.6|-0.1|-0.4|0.4|**-3.5**|-1.1|-0.6|-0.2|-1.0|**13.8**|**-4.2**|
|Oil extraction|-0.5|0.0|0.3|**-2.5**|**-37.5**|**-3.8**|-0.8|-0.7|-0.4|0.4|0.0|-0.7|-1.3|-0.7|-0.4|0.3|0.0|-1.1|
|Water|0.0|0.0|0.0|-0.3|1.2|-0.2|0.0|-1.5|-0.4|0.0|0.2|**-2.6**|-0.1|-1.4|-0.4|-0.3|1.7|**-3.0**|
|Other natural resources|0.0|0.0|0.0|-0.2|**-9.2**|-0.1|-0.2|-1.2|0.2|-0.3|1.4|**-1.9**|-0.1|-1.1|0.2|-0.5|**-7.2**|**-2.1**|
|Petroleum and coal|0.8|0.0|0.0|-1.0|**-3.9**|0.9|1.1|-1.4|-0.7|-1.3|1.5|**-3.6**|2.0|-1.4|-0.7|**-2.1**|**-2.2**|**-2.8**|
|Electricity|0.0|0.1|0.0|-0.4|1.5|-0.2|-0.1|-1.4|-0.2|-0.2|0.3|**-2.1**|-0.2|-1.3|-0.2|-0.6|**2.2**|**-2.4**|
|Chemicals and metallurgy|0.0|0.0|0.1|-1.3|-0.5|1.9|-0.1|**-2.8**|0.6|-0.6|-0.1|**4.6**|-0.2|**-2.6**|0.7|-1.8|-0.6|**7.9**|
|Textiles and apparel|-0.2|0.0|0.0|-0.5|**4.1**|-0.2|-0.3|**-2.1**|-0.2|-0.4|-1.1|**17.9**|-0.5|**-2.1**|-0.2|-0.8|**3.3**|**20.9**|
|Resource based manufactures|-0.1|0.0|0.1|-0.5|**-2.6**|-0.1|-0.2|-1.5|-0.5|-0.3|0.4|**-4.5**|-0.2|-1.5|-0.5|-0.8|**-2.3**|**-4.9**|
|Equipment and vehicles|-0.1|0.0|0.1|-0.4|-1.3|0.3|-0.3|-1.6|-0.9|-0.2|0.0|**-5.5**|-0.4|-1.6|-0.8|-0.5|-1.3|**-5.8**|
|Metal products|-0.1|0.0|0.5|-0.4|**-2.5**|0.1|-0.3|**-2.7**|0.3|-0.2|0.3|**-2.1**|-0.3|**-2.7**|0.8|-0.4|**-2.2**|**-2.2**|
|Other manufactures|-0.1|0.0|0.0|-1.2|**3.9**|1.9|-0.1|-1.1|0.2|-0.1|-0.7|**-3.7**|-0.1|-1.1|0.2|-1.2|**2.6**|**-2.8**|
|Construction|0.1|0.0|0.0|-0.1|**3.0**|0.3|-0.1|**-2.2**|-0.8|**-0.1**|-0.4|-1.5|-0.1|**-2.2**|-0.8|-0.1|**3.0**|-1.2|
|Transport|0.0|0.0|-0.1|-0.6|0.9|**4.2**|0.0|**-3.3**|-1.6|**-1.6**|1.7|**-5.3**|0.1|**-3.2**|-1.7|**-2.1**|**3.7**|0.2|
|Trade|0.0|0.0|0.0|-0.3|**2.2**|**0.0**|-0.1|-1.2|-0.5|0.0|0.2|**-2.0**|-0.1|-1.3|-0.5|-0.3|**2.7**|**-2.0**|
|Communications|0.0|0.0|-0.2|-0.8|**2.9**|-1.3|-0.1|**2.3**|1.9|-0.3|**2.4**|**14.9**|-0.1|**2.3**|1.6|-1.3|**7.2**|**10.2**|
|FIRE|0.0|0.0|-0.1|-0.2|**2.4**|1.0|-0.1|-0.5|-0.4|-0.2|1.2|-1.2|-0.1|-0.5|-0.5|-0.4|**4.9**|0.3|
|Public services|0.0|0.0|0.1|0.1|1.3|-0.9|-0.1|-0.8|0.0|0.1|0.0|**-2.7**|-0.1|-0.8|0.0|0.2|1.3|**-3.8**|
|Other Business services|0.0|-0.1|-0.3|-0.1|**-2.5**|-0.1|-0.1|0.4|2.1|0.0|**4.9**|**11.7**|-0.1|0.4|1.5|-0.2|-0.6|**10.6**|
|Tourism and others|0.0|0.0|-0.1|-0.3|-0.5|0.9|-0.1|-1.6|-0.6|-0.1|0.7|**-3.1**|-0.2|-1.6|-0.7|-0.4|0.3|**-2.1**|
|_Total real output_|-0.1|-1.4|-0.9|-0.2|-0.1|-2.0|0.0|0.0|-0.1|-0.3|**4.5**|0.3|-0.1|-1.6|-1.0|-0.5|**4.9**|-1.9|

Note: Changes greater than 2% are highlighted in bold. Numbers represent differences between the GE and linear solutions b calculated as ((1+bGE)/(1+bL)-1)*100, where L stands for linear solution.

Furthermore, the pure GE effects differ not only in size but also in sign, suggesting that a linear solution would either underestimate or overestimate the effect of war on key indicators of interest. These differences are large in the cases of per capita welfare in Syria, real factor prices and sectoral outputs in Syria and Iraq. The linear solution significantly overstates the decline of real land prices in Syria and understates it in Iraq, correspondingly exaggerating and understating 27