The fiscal cost of conflict: Evidence from Afghanistan 2005–2017

Philip Barrett

World Development, 2022, vol. 157, issue C

Abstract: I use a novel monthly panel of provincially-collected central government revenues and conflict fatalities to estimate government revenues lost due to conflict in Afghanistan since 2005. Headline estimates are large, implying total revenue losses of $3bn since 2005 and that gains from peace would have been about 6 percent of GDP per year. That this is larger than estimates in cross-country studies reflects the uncommon intensity of the conflict in Afghanistan. The key challenge to identification is omitted variable bias, which I address by extending Powell’s (2021) generalized synthetic control method to a dynamic setting. This allows estimation of impulse response functions robust to a broad class of omitted variables bias.

Keywords: Conflict; Peace dividend; Fiscal policy; Afghanistan (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:157:y:2022:i:c:s0305750x22001309

DOI: 10.1016/j.worlddev.2022.105940

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