Economic Shocks and Conflict: Evidence from Commodity Prices

51 Pages Posted: 23 May 2013  

Samuel Bazzi

University of California, San Diego (UCSD)

Christopher Blattman

University of Chicago, Harris School of Public Policy; National Bureau of Economic Research (NBER)

Date Written: March 22, 2013

Abstract

Higher national incomes are correlated with lower political instability. We test three theories linking income to conflict using a new database of export price shocks. Price shocks have no effect on new conflicts, even large shocks in high-risk nations. Rising prices, however, lead to shorter, less intense wars. This evidence contradicts the theory that rising state revenues incentivize attempts at capture, but accords with two theories: that rising revenues improve state counter-insurgency capacity and reduce individual incentives to fight in existing conflicts. Conflict onset and continuation follow different processes. Ignoring this time dependence generates mistaken conclusions about income and instability.

Keywords: income shocks, political instability, fragile states

Suggested Citation

Bazzi, Samuel and Blattman, Christopher, Economic Shocks and Conflict: Evidence from Commodity Prices (March 22, 2013). Available at SSRN: https://ssrn.com/abstract=2268061 or http://dx.doi.org/10.2139/ssrn.2268061

Samuel Bazzi

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

Christopher Blattman (Contact Author)

University of Chicago, Harris School of Public Policy ( email )

1101 East 58th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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