Economic shocks and civil conflict -- based on “Transitory Economic Shocks and Civil Conflict” by Ciccone -- “Democracy, Growth, and Civil War” by Brückner&Ciccone

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?

(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

Transitory positive shock at t=1 (e.g. rainfall shock) time negative growth conflict onset? YES…but then conflict may follow positive, not negative shocks!

Civil conflict onset and transitory shocks Level specification Probability(Onset ct ) =a ct +b*logRainfall ct +c*logRainfall ct-1 Growth specification Probability(Onset ct ) =a ct +b*(logRainfall ct -logRainfall ct-1 ) caution: rainfall growth may be low because of a negative rainfall shock or mean-reversion following a positive rainfall shock

Latest PRIO conflict data (i) same period as before ( ) (ii) longest possible period ( )

Civil war? No reduced form effect of rainfall shocks on civil war onset

Instrumental variables approach Use rainfall as instrument for deviation of income per capita from trend

(First stage)

(Second stage)

(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?

Permanent positive shock at t=1 (e.g. natural resource prices) time 01234

Civil conflict onset and permanent shocks Level specification Probability(Onset ct ) =a ct +b*logPrice ct +c*logPrice ct-1 Growth specification Probability(Onset ct ) =a ct +b*(logPrice ct -logPrice ct-1 ) caution: price series may be non-stationary

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

(3-year average)

Instrumental variables approach Use commodity price growth as instrument for economic growth

(3-year average) (First stage)

(Second stage)

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

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

Heterogenous effects high versus low initial income democracies versus autocracies

(Reduced form)

11 (F&PF versus NF)

(Reduced form) 12

Conclusions Civil war Civil conflict Transitory negative shocks (rainfall) Permanent negative shocks (commodity prices)

(First stage) Supplementary Table