Predicting Winners in Civil Wars

35 Pages Posted: 23 Oct 2014

See all articles by Stephen Haber

Stephen Haber

Stanford University - Hoover Institution and Political Science

Kris James Mitchener

Santa Clara University - Leavey School of Business - Economics Department; National Bureau of Economic Research (NBER); CEPR

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB

Marc Weidenmier

Claremont McKenna College - Robert Day School of Economics and Finance; National Bureau of Economic Research (NBER)

Date Written: August 2014

Abstract

We develop a method to estimate which side will win a civil war. The key insight we deliver is that, for typical sovereign debt contracts, the probability of debt repayment will equal the probability of victory in a civil war. We test our predictor for standard outcomes in civil wars, including when the incumbent government loses (the Chinese Nationalists), when a new government is installed by a foreign power and decides to repudiate debt (the restoration of Ferdinand VII of Spain), and when there is a secession (the U.S. Confederacy). For China, markets were predicting a Communist victory three years before it happened. For the U.S., markets never gave the South much more than a 40 percent chance of maintaining the Confederacy. For Spain, markets considered the restoration of Ferdinand VII as likely (probabilities above 50%) as soon as France declared its intention to send military forces to the area.

Keywords: asset prices, civil wars, conflict, predictions markets

JEL Classification: F3, G1, N2, O1

Suggested Citation

Haber, Stephen H. and Mitchener, Kris James and Oosterlinck, Kim and Weidenmier, Marc D., Predicting Winners in Civil Wars (August 2014). CEPR Discussion Paper No. DP10109. Available at SSRN: https://ssrn.com/abstract=2513468

Stephen H. Haber (Contact Author)

Stanford University - Hoover Institution and Political Science ( email )

Stanford, CA 94305
United States

Kris James Mitchener

Santa Clara University - Leavey School of Business - Economics Department ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States
408.554.4340 (Phone)
408.554.2331 (Fax)

HOME PAGE: http://lsb.scu.edu/~kmitchener/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CEPR ( email )

London
United Kingdom

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB ( email )

50 Avenue Roosevelt, CP114/03
Brussels 1050
Belgium

Marc D. Weidenmier

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
4
Abstract Views
1,033
PlumX Metrics