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A note on the macroeconomic consequences of ethnic/racial tension

Kerim Arin (), Murat Koyuncu () and Nicola Spagnolo

Economics Letters, 2017, vol. 155, issue C, 100-103

Abstract: While many studies stressed the importance of ethnic fractionalization on long-term economic growth, neither ethnic fractionalization always leads to ethnic conflict nor the intensity of conflict is constant over time. To address this potential bias, we construct an ethnic/racial tension index by using the number of US news articles that contain certain keywords. Utilizing this index we test the predictions of a simple theoretical model in a Markov Switching framework which allows to identify the impact of ethnic/racial tension in different states of the economy. Consistent with our theoretical predictions, results show that the magnitude of the impact of ethnic/racial tension is larger during low-growth periods.

Keywords: Ethnic tension; Markov Switching; News; Racial tension (search for similar items in EconPapers)
JEL-codes: C5 D74 P48 Z13 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.econlet.2017.02.015

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