Publication: Three Macroeconomic Trends Around the Onset of Armed Conflict in Developing Economies
Date
2018-11
ISSN
Published
2018-11
Author(s)
Abstract
This paper studies the evolution of
three macroeconomic variables (namely current fiscal
expenditures, public debt, and consumer-price inflation)
around the time of the onset of armed conflicts during
1950-2016. The authors compare the performance of these
variables in conflict-afflicted economies with economies
that did not experience social conflict. The analyses cover
episodes of conflict from around the world and study the
evolution of these variables during the five years prior to
and five years after the onset of conflicts. Further, four
alternative definitions of social conflict are used to
ascertain the robustness of the econometric results. The
evidence suggests that current fiscal expenditures and
public debt (both as a share of gross domestic product) in
conflict-afflicted economies tend to be higher than in
non-conflict economies prior to the onset of conflict, begin
to rise further prior to the date of the onset of conflict,
and stay relatively high after the onset of conflict. In
contrast, there is little evidence that inflation is higher
in conflict-afflicted economies, prior to or after the onset
of conflict. These differential trends between
conflict-afflicted and non-conflict economies shed new light
on the existing literature on macroeconomic populism, and on
key macroeconomic aspects of the economics of post-conflict reconstruction.
Link to Data Set
Citation
“Lederman, Daniel; Rojas, Claudio J.. 2018. Three Macroeconomic Trends Around the Onset of Armed Conflict in Developing Economies. Policy Research Working Paper;No. 8647. © World Bank, Washington, DC. http://hdl.handle.net/10986/30875 License: CC BY 3.0 IGO.”
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