Economic shocks and civil conflict

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Economic shocks and civil conflict

• -- based on Transitory Economic Shocks and Civil
  Conflict by Ciccone
• -- Democracy, Growth, and Civil War by
  BrücknerCiccone

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This presentation and the literature

• aim to contribute to literature on economic
  shocks and civil conflict
• specifically

(1) rainfall shocks and civil conflict/war in
Sub-Saharan Africa?
(2) commodity price shocks and civil conflict/war
in SSA?
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(1) Rainfall shocks and civil conflict/war

• Existing evidence (rainfall growth)?
  conflict/war onset and incidence
• (see Miguel et al Economic Shocks and Civil
  Conflict An Instrumental-Variables Approach,
  JPE 2004)
• Result (low growth)?(high conflict probability)

But rainfall shocks are transitory and low
rainfall growth may therefore be due to --
negative rainfall shock -- mean reversion after
positive rainfall shock
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Transitory positive shock at t1(e.g. rainfall
shock)
negative growth
conflict onset?
0
1
2
3
4
time
YESbut then conflict may follow positive, not
negative shocks!
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Civil conflict onset and transitory shocks

• Level specification
• Probability(Onsetct)
• actblogRainfallctclogRainfallct-1
• Growth specification
• Probability(Onsetct)
• actb(logRainfallct-logRainfallct-1)

caution rainfall growth may be low because of a
negative rainfall shock or mean-reversion
following a positive rainfall shock
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Latest PRIO conflict data

• (i) same period as before (1981-1999)
• (ii) longest possible period (1981-2006)

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Civil war?

• No reduced form effect of rainfall shocks on
  civil war onset

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Instrumental variables approach

• Use rainfall as instrument for deviation of
  income per capita from trend

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(First stage)
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(Second stage)
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(2) Commodity prices and civil conflict/war?

• The timing of civil wars in Uganda, Rwanda, and
  Burundi appear to be related to fall in price of
  coffee, their biggest export

• Is there evidence of a more generalized link
  between commodity export prices and civil
  conflict/war?

• Can commodity price fluctuations be used to
  estimate the effects of economic growth shocks on
  civil conflict/war?

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Permanent positive shock at t1(e.g. natural
resource prices)
0
1
2
3
4
time
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Civil conflict onset and permanent shocks

• Level specification
• Probability(Onsetct)
• actblogPricectclogPricect-1
• Growth specification
• Probability(Onsetct)
• actb(logPricect-logPricect-1)

caution price series may be non-stationary
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International Commodity Price Index
AGRICULTURAL COMMODITIES bananas, cocoa, coffee,
cotton, fish, groundnuts, livestock, sugar, tea,
tobacco, wood. NATURAL RESOURCES aluminium,
copper, gold, iron, nickel, oil, phosphates,
uranium. Sources Deaton, 1999 JEP, UN ComTrade,
IMF
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(3-year average)
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Instrumental variables approach

• Use commodity price growth as instrument for
  economic growth

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(First stage)
(3-year average)
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(Second stage)
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Civil conflict?

• No reduced form effect of commodity prices shocks
  on civil conflict onset

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Robustness

• excluding large commodity suppliers (more than 3
  of world supply)
• agricultural vis-à-vis natural resource
  commodities

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Heterogenous effects

• high versus low initial income
• democracies versus autocracies

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(Reduced form)
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(Reduced form)
(FPF versus NF)
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(Reduced form)
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Conclusions
Civil war
Permanent negative shocks (commodity prices)
Civil conflict
Transitory negative shocks (rainfall)
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Supplementary Table
(First stage)