The Economic Effects of Violent Conflict: Evidence from Asset Market Reactions
30 Pages Posted: 25 Oct 2005
Date Written: October 2005
This paper studies the effects of conflict onset on asset markets applying the event study methodology. We consider a sample of 112 conflicts during the period 1974-2004 and find that a sizeable fraction of them had a significant impact on stock market indices and on major commodity prices. Furthermore, our results suggest that we are more likely to see investor reactions in response to conflicts that occur in highly polarized settings, possibly because the expected duration and intensity of the conflict is higher.
Keywords: Conflict onset, Event study, Asset markets, Polarization
JEL Classification: G14, P16
Suggested Citation: Suggested Citation