Measuring the impact of violence on macroeconomic instability: evidence from developing countries

Rabia Haroon and Zainab Jehan ()
Additional contact information
Rabia Haroon: Women University
Zainab Jehan: Women University

Portuguese Economic Journal, 2022, vol. 21, issue 1, No 2, 3-30

Abstract: Abstract Uncertainty induced by various economic and non-economic factors instigates macroeconomic instability. Macroeconomic instability, further, reduces predictability of a country’s macroeconomic situation, leading to misallocation of resources, reduction in economic growth and investment. This study aims at investigating the impact of violence on macroeconomic instability in selected developing countries over the period of 1984–2016. In doing so, the study has used various dimensions of violence in order to test the size, significance and direction of each type of violence for macroeconomic instability. Macroeconomic instability index is computed by using terms of trade, inflation rate, unemployment rate and real exchange rate. For estimating the impact of violence on macroeconomic instability, we have employed system GMM technique. This empirical findings state that violence increases macroeconomic instability in selected sample of developing countries. We also report that among developing countries, low-income countries suffer more from violence in comparison to the middle-income countries. This finding is robust among all dimensions of violence taken by the study. Notably, we have found that the harmful impact of interstate violence is highest for macroeconomic instability. Our findings are robust as violence creates uncertainty which distorts investment, savings and consumption, and hence affects overall economic performance.

Keywords: Violence; Macroeconomic instability; Globalization; Financial development (search for similar items in EconPapers)
JEL-codes: D89 E24 F62 P44 Q34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10258-020-00188-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:portec:v:21:y:2022:i:1:d:10.1007_s10258-020-00188-y

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10258/PS2

DOI: 10.1007/s10258-020-00188-y

Access Statistics for this article

Portuguese Economic Journal is currently edited by Luís F. Costa

More articles in Portuguese Economic Journal from Springer, Instituto Superior de Economia e Gestao
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().