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Economic Shocks and Conflict: Evidence from Commodity Prices

Samuel Bazzi and Christopher Blattman ()

American Economic Journal: Macroeconomics, 2014, vol. 6, issue 4, 1-38

Abstract: Higher national incomes are correlated with political stability. Is this relationship causal? We test three theories linking income to conflict with new data on export price shocks. Price shocks have no effect on new conflict, even large shocks in high-risk nations. Rising prices, however, weakly lead to shorter, less deadly wars. This evidence contradicts the theory that rising state revenues incentivize state capture, but supports the idea that rising revenues improve counterinsurgency capacity and reduce individual incentives to fight in existing conflicts. Conflict onset and continuation follow different processes. Ignoring this time dependence generates mistaken conclusions about income and instability.

JEL-codes: D72 D74 O13 O17 O19 Q02 Q34 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mac.6.4.1
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Handle: RePEc:aea:aejmac:v:6:y:2014:i:4:p:1-38