Follow Paul Donovan

The economics of malware

| Posted by: Paul Donovan | Tags: Paul Donovan

  • What is the economic consequence of a computer virus? In economic (not human) terms, the implications are similar to a natural disaster. A virus disrupts businesses and supply chains in the short run. Infrastructure is destroyed and must be replaced or upgraded.
  • The GDP pattern is also similar to a natural disaster. The initial disruption is GDP negative. The subsequent investment and rebuilding is GDP positive (GDP measures activity, and more activity is required to rebuild). The standard of living is negatively affected by the destruction of accumulated capital.
  • German Chancellor Merkel's CDU party won the largest share of the votes in the local elections in North Rhine Westphalia. The state has the largest population in Germany. Although German local elections focus on local issues, this is likely to be viewed as improving Merkel's prospects in the forthcoming federal elections.
  • Chinese industrial production was a little weaker than expected. Chinese retail sales continue strong, however, with the consumer share of the economy increasing. Ahead there are some consumer price inflation figures from Euro area economies, and Greek and Portuguese GDP figures.