analyzing the impact of the world s largest public works project on crime india started the implementation of a rural public works program in 2006 covering all districts of the country within 3 years the program guarantees 100 days of employment per year at minimum wage to each rural household with the goal of reducing joblessness and poverty we exploit the design and implementation of this program to investigate its employment impact on various types of crimes to provide rare evidence on the employment crime relationship in a developing country context we find that employment generated by the program has a negative impact on both property crime and violent crime the same conclusion is reached when we analyze the impact of the program using its staggered rollout structure as the source of identification in a difference in difference analysis although crime elasticities with respect to employment are small this finding represents another dimension of the social benefit generated by the program jel k4 e24 h54

commodity price shocks and civil conflict evidence from colombia how do income shocks aect armed con ict theory suggests two op posite eects if labor is used to appropriate resources violently higher wages may lower con ict by reducing labor supplied to appropriation this is the opportunity cost eect alternatively a rise in contestable income may increase violence by raising gains from appropriation this is the rapacity eect our paper exploits exogenous price shocks in inter national commodity markets and a rich dataset on civil war in colombia to assess how dierent income shocks aect con ict we examine changes in the price of agricultural goods which are labor intensive and natural resources which are capital intensive we focus on coee and oil the two largest exports we nd that a sharp fall in coee prices in the 1990s increased violence dierentially in regions growing more coee by lower ing wages and the opportunity cost of joining armed groups in contrast a rise in oil prices increased violence dierentially in the oil region by in creasing municipal revenue siphoned through rapacity this pattern holds in several other agricultural and natural resource sectors providing robust evidence that price shocks aect con ict in opposite directions depending on the factor intensity of the commodity

the tragedy of the commons in a violent world earlier research has shown that the tragedy of the commons may be resolved by folk theorems for dynamic games in this article we graft on a standard natural resource exploitation game the possibility to appropriate the resource through violent means because conflict emerges endogenously as resources get depleted the threat supporting the cooperative outcome is no longer subgame perfect and thus credible the unique equilibrium is such that players exploit noncooperatively the resource when it is abundant and they revert to conflict when it becomes scarce the players utility is shown to be lower even if conflict wastes no resources

the optimal level of social security benefits the optimal level of social security benefits depends on balancing the protection that these benefits offer to those who lack the foresight to provide for their own old age against the welfare costs of distorting economic behavior the primary such cost is the distortion in private saving the present paper derives the level of social security benefits that is optimal in three basic cases in the first section the paper derives the optimal level of benefits for an economy in which all individuals do not anticipate retirement at all and therefore do no saving the second and third sections then derive optimal benefits for two different definitions of incomplete myopia

does lootable wealth breed disorder a political economy of extraction framework this article proposes a political economy of extraction framework that explains political order and state collapse as alternative outcomes in the face of lootable wealth different types of institutions of extraction can be built on lootable resources with divergent effects on political stability if rulers are able to forge institutions of extraction that give them control of revenues generated by lootable resources then these resources can contribute to political order by providing the income with which to govern conversely the breakdown or absence of such institutions increases the risk of civil war by making it easier for rebels to organize the framework is used to explain two puzzling cases that experienced sharply contrasting political trajectories in the face of lootable resources sierra leone and burma a focus on institutions of extraction provides a stronger understanding of the wide range of political outcomes from chaos to dictatorship to democracy in resource rich countries

extreme weather and civil war does drought fuel conflict in somalia through livestock price shocks climate change leads to more frequent and more intense droughts in somalia in a global context weather shocks have been found to perpetuate poverty and fuel civil conflict by relating regional and temporal variations in violent conflict outbreaks and drought incidence and severity we show that this causality is also valid for somalia at the local level we find that livestock price shocks drive drought induced conflicts through reducing the opportunity costs of conflict participation our estimation results indicate that a temperature rise of around 3 2 degree celcius corresponding to the median ipcc scenario for eastern africa by the end of the century would lower cattle prices by about 4 percent and in turn increase the number of violent conflict by about 58 percent hence climate change will further aggravate somalia s security challenges and calls for decisive action to strengthen both drought and conflict resilience especially in pastoralist and agropastoralist livelihoods

on the salience of ethnic conflict ray acknowledges support from the national science foundation under grants 0421852 and 0617827 esteban is a member of barcelona economics xrea and is grateful for support from the generalitat de catalunya and the cicyt sej 2006 00369 this research is part of the polarization and conflict research project cit2 ct 2004 506084 funded by the european commission dg research sixth framework program

from maize to haze agricultural shocks and the growth of the mexican drug sector understanding how economic incentives affect illegal drug production is essential for crafting policies in response to the international drug trade policymakers typically face a choice between two strategies targetingcriminalgroupsvialawenforcement andofferingproducersincentivestoengage in alternate activities yet little is known about how the returns to alternate legal activities affect drug supply we contribute to this literature by examining how shocks to legal commodity prices affect the drug trade in mexico our analysis exploits exogenous movements in the mexican maize price stemming from weather conditions in u s maize growing regions as well as exports of other major maize producers using data on over 2200 municipios spanning 1990 2010 we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

conditional cash transfers civil conflict and insurgent influence experimental evidence from the philippines abstract conditional cash transfer cct programs are an increasingly popular tool for reducing poverty in conflict affected areas despite their growing popularity there is limited evidence on how cct programs affect conflict and theoretical predictions are ambiguous we estimate the effect of conditional cash transfers on civil conflict in the philippines by exploiting an experiment that randomly assigned eligibility for a cct program at the village level we find that cash transfers caused a substantial decrease in conflict related incidents in treatment villages relative to control villages in the first 9 months of the program using unique data on local insurgent influence we also find that the program reduced insurgent influence in treated villages an analysis of possible spillovers yields inconclusive results while we find no statistical evidence of spillovers we also cannot rule out that the village level effect was due to displacement of insurgent activity from treatment to control villages

the logic of political violence this paper offers a unified approach for studying political violence whether it emerges as repression or civil war we formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one sided or two sided violence repression or civil war the model predicts a hierarchy of violence states from peace via repression to civil war and suggests a natural empirical approach exploiting only within country variation in the data we show that violence is associated with shocks that can affect wages and aid as in the theory these effects are only present where political institutions are non cohesive

cyclicality mortality and the value of time the case of coffee price fluctuations and child survival in colombia recent studies demonstrate procyclical mortality in wealthy countries but there are reasons to expect a countercyclical relationship in developing nations we investigate how child survival in colombia responds to fluctuations in world arabica coffee prices and document starkly procyclical child deaths in studying this result s behavioral underpinnings we highlight that 1 the leading determinants of child health are inexpensive but require considerable time and 2 as the value of time declines with falling coffee prices so does the relative price of health we find a variety of direct evidence consistent with the primacy of time in child health production

internal cocaine trafficking and armed violence in colombia this paper exploits time variations in international cocaine prices and potential trafficking routes within colombia to estimate the effect of the illegal cocaine trade on changes in municipality homicide rates i construct the potential internal cocaine trafficking network and exploit the fact that different regions in colombia have comparative advantages in serving different international markets my results suggest that when cocaine prices increase in either the united states or europe homicide rates increase in municipalities strategically placed to serve each international market jel d74 k42 f19

the sword and the shield the economics of targeted sanctions abstract how effective are smart sanctions in imposing costs on an adversary we consider this question in a model where a targeted regime may choose to shield strategically important firms from harm using detailed firm and individual data we estimate the impact on firm performance from smart sanctions deployed by the u s and eu against russia beginning in 2014 we find significant losses in operating revenue asset values and employees for sanctioned firms relative to their non sanctioned peers which are greater in sectors dependent upon western service inputs strategic firms systemically outperform non strategic firms under sanctions implying a cost of shielding to the regime that adds substantially to the total cost of sanctions jel f5

from curse to blessing institutional reform and resource booms in colombia abstract is it possible to reverse the resource curse through institutional reform evidence suggests that there is a negative relationship between abundance of natural resources and economic growth political stability democracy and peace however evidence illustrating how institutional reform can reverse this situation is scarce in this paper we exploit a component of an institutional reform that modified the allocation rule of oil royalties in colombia and evaluate a set of effects of this reform on the living standards of colombian households using international variations in the price of oil for identification we find that the reform had important effects on several household welfare indicators we find positive impacts on important dimensions such as reductions in multidimensional poverty and improvements on income employment housing conditions health and education among others results are mixed or null in other outcomes such as formality or employment in the service sector importantly we find no effects on monetary poverty but larger income effects for rich and urban households we test for the different channels boosting these effects and provide tentative evidence that supports the role of fiscal and administrative capacity mechanisms

conflict and deterrence under strategic risk we examine the determinants of cooperation and the effectiveness of deterrence when fear is a motive for conflict we contrast results obtained in a complete information setting with those obtained in a setting with strategic risk where players have different information about their environment these two strategic settings allow us to identify and distinguish the role of predatory and preemptive incentives as determinants of cooperation and conflict in our model weapons unambiguously facilitate peace under complete information in contrast under strategic risk we show that increases in weapon stocks can have a nonmonotonic effect on the sustainability of cooperation we also show that under strategic risk asymmetry in military strength can facilitate peace and that anticipated peacekeeping interventions may improve incentives for peaceful behavior

economic determinants of land invasions this study estimates the effect of economic conditions on redistributive conflict we examine land invasions in brazil using a panel data set with over 50 000 municipality year observations adverse eco nomic shocks instrumented by rainfall cause the rural poor to invade and occupy large landholdings this effect exhibits substantial heterogeneity by land inequality and land tenure systems but not by other observable variables in highly unequal municipalities negative income shocks cause twice as many land invasions as in municipalities with average land inequality cross sectional estimates using fine within region variation also suggest the importance of land inequality in explaining redistributive conflict i introduction c onflict over land is endemic to many rural econo mies in environments marked by a highly skewed distribution of property incomplete land and credit markets poorly or unevenly enforced property rights and weak political institutions agents often resort to extralegal means to improve their economic positions the poor frequently invade private properties and occupy them until either forcibly expelled or granted official titles land conflict which is prevalent in many countries such as brazil south africa uganda and venezuela may distort the allocation of resources in the agricultural sector away from productive uses and thereby contribute to the persistence of rural poverty how do economic conditions affect this redistrib utive conflict this paper explores this question using a rich municipal level data set of 5 299 land invasions from 1988 to 2004 in brazil we follow miguel satyanath and sergenti 2004 by using rainfall as a source of exogenous variation to study the relationship between income and conflict and we find that adverse economic shocks cause the rural poor to invade large landholdings this effect exhibits considerable het erogeneity by land inequality and land tenure systems in highly unequal municipalities negative income shocks cause twice as many land invasions as in municipalities with average land inequality the effect of income shocks is even stronger in highly polarized municipalities as measured by the degree of bimodality in the land distribution cross sectional estimates using fine within region variation also suggest the importance of land inequality in explaining redistributive conflict we also find that income shocks cause significantly more land invasions in municipalities with a greater proportion of land under fixed rent contracts by contrast we find no evidence of heterogeneity on a range of other political and socioeconomic variables including political competition sharecropping police expenditures and social welfare spending recent microeconometric studies have examined two

violence and birth outcomes evidence from homicides in brazil abstract this paper uses microdata from brazilian vital statistics on births and deaths between 2000 and 2010 to estimate the impact of in utero exposure to local violence measured by homicide rates on birth outcomes the estimates show that exposure to violence during the first trimester of pregnancy leads to a small but precisely estimated increase in the risk of low birthweight and prematurity effects are found both in small municipalities where homicides are rare and in large municipalities where violence is endemic and are particularly pronounced among children of poorly educated mothers implying that violence compounds the disadvantage that these children already suffer as a result of their households lower socioeconomic status

do giant oilfield discoveries fuel internal armed conflicts we use new data to examine the effects of giant oilfield discoveries around the world since 1946 on average these discoveries increase per capita oil production and oil exports by up to 50 percent but these giant oilfield discoveries also have a dark side they increase the incidence of internal armed conflict by about 5 8 percentage points this increased incidence of conflict due to giant oilfield discoveries is especially high for countries that had already experienced armed conflicts or coups in the decade prior to discovery

international commodity prices growth and the outbreak of civil war in sub saharan africa to learn more about the effect of economic conditions on civil war we examine whether sub saharan civil wars are more likely to start following downturns in the international price of countries main export commodities the data show a robust effect of commodity price downturns on the outbreak of civil wars we also find that sub saharan countries are more likely to see civil wars following economic downturns in their main oecd export destinations

the price elasticity of african elephant poaching the objective of this paper is to provide an estimate of the elasticity of elephant poaching with respect to prices ivory being a storable commodity subjects its price to hotelling s no arbitrage condition hence allowing identification of the supply curve the price of gold one of many commodities used as stores of value is thus used as an instrument for ivory prices the supply of illegal ivory is found to be price inelastic with an elasticity of 0 4 with changes in consumer prices passing through to prices faced by producers at a rate close to unity estimations based on a number of alternative estimation approaches all confirm the conclusion that supply is inelastic the paper ends with a brief discussion on what such finding implies for elephant conservation policies

blessing and curse the gold boom and local development in colombia abstract i provide a microeconomic channel for the resource curse using the boom in colombian gold mining as a case study identification strategies exploit trend changes in international gold prices after 2002 and regional gold production capabilities as measured by water supply the majority of gold mining in colombia is placer mining and water is important for industrial gold production i find that the gold boom decreases local unemployment in the short term by 3 5 however given the lack of capacity to effectively ban child labor these economic opportunities are also available for children my results indicate that because of the gold boom the probability that a child works increases by 9 3 and school attendance decreases by 23 9 capital accumulation seems to be permanently hurt since the probability that a child is lagging three or more grades behind increases by 9 these effects are only discernible after 2002 the human capital results can be retrieved from different databases furthermore results are robust to a series of robustness checks restricting the sample to gold producers and their neighbors using alternative sets of controls and restricting the sample to non migrants resources are a blessing in the short term but a curse for long term economic growth if human capital is productive

natural resource access and local economic growth abstract we explore the existence of a local resource curse related to brazil s oil using oil price annual changes interacted with measures of local proximity to oil reserves we find that oil royalty receiving locations in brazil that are closer to an oil field are characterized by a higher level of income per capita when controlling for a range of potentially confounding factors furthermore in a panel setting we find that better geographical access to oil fields generates a greater positive effect of oil prices on local income per capita moreover this positive impact of oilfield proximity on the effect of oil prices is enhanced in oil rich states importantly these effects appear to be independent of the amount of oil royalties suggesting the role of an indirect linkage effect

the political economy of the maoist conflict in india an empirical analysis we study the maoist naxalite conflict in india by constructing a comprehensive district level database combining conflict data from four different terrorism databases to socioeconomic and geography data from myriad sources using data on 360 districts for three time periods we find that land inequality and lower incomes are important factors behind the conflict exploiting the micro structure of the data we show that growth of incomes of scheduled tribes significantly decreases the intensity of the conflict finally we show that historical property rights institutions from colonial times that go back centuries affect present day conflict outcomes

chilean pension reform coverage facts and policy alternatives as opposed to defined benefit pension schemes which are showing sustainability problems around the world individual capitalization systems are seen as financially solvent however there has been some controversy during the last years with respect to this system s ability to provide adequate pensions nevertheless in any contributory system defined benefit or defined contribution the performance of labor markets is crucial the lack of contributions in the first case would imply financial problems or exclusion and lower pensions in the second this article presents an analysis of how different variables affect the pension level in an individual capitalization scheme assessing their relative importance then individual level administrative data combined with survey information is used to project pension benefits the results show that a considerable percentage of the population would not be able to self finance an old age pension higher than the level of the minimum pension guarantee in expected terms moreover most of them would not be entitled to get state funding to obtain a pension of that amount however the heterogeneity of individuals implies that there are very different situations and that not all of those who receive a low pension are vulnerable when old there are cases in which individuals have other types of savings or in the case of women they might live of their husband s pension or widow pension benefit if diseased additionally two possible reforms are explored and their potential impact is evaluated the default contribution for self employed and the extension of the minimum pension guarantee for a broader range of contribution periods not just 20 years

out of the ashes into the fire the consequences of u s weapons sales for political violence abstract we examine the effect of u s weapons purchases on political violence in 191 countries during the period 1970 2008 our identification strategy exploits exogenous shifts in the cost of purchasing u s commercial weapons through a combination of time variation in u s inflation and cross sectional variation in a country s historical frequency of purchases we find that weapons purchases reduce the likelihood of political repression but increase the likelihood of onset of civil war in purchasing countries the results suggest that state investment in military capability incites civil war in countries where state repression of an aggrieved opposition would have otherwise prevailed

fossil fuel producers under threat oil and gas producers face three threats prolonged low oil and gas prices tightening of climate policy and a tough budget on cumulative carbon emissions and technological innovation producing cheap substitutes for oil and gas these threats pose real risks of putting oil and gas producers out of business they lead to the problem of stranded assets and a significant downward valuation of oil and gas producers this calls for divesting from and shorting coal oil and gas the economies of oil and gas rich countries are typically in a deplorable state since they did not use their past windfalls to build up buffers and invest in a diversified economy more rapacious depletion of their oil and gas reserves will not help after the crash in oil and gas prices these countries are facing serious problems and it is difficult to see how they will cope with the outlined threats

civil war and u s foreign influence we study how foreign interventions affect civil war around the world in an infinitely repeated game we combine a gambling for resurrection mechanism for the influencing country with the canonical bargaining model of war in the influenced country to micro found sudden shifts in power among the domestic bargaining partners which are known to lead to war due to commitment problems we test two of our model predictions that allow us to identify the influence of foreign intervention on civil war incidence i civil wars around the world are more likely under republican governments and ii the probability of civil wars decreases with the u s presidential approval rates these results withstand several robustness checks and overall suggest that foreign influence is a sizable driver of domestic conflict

economic impacts of el nino southern oscillation evidence from the colombian coffee market el nino southern oscillation enso is a naturally occurring phenomenon that affects weather around the world past enso episodes have had severe impacts on the economy of colombia we study the influence of enso on colombian coffee production exports and price our structural econometric specification is consistent with an economic model of the market for colombian coffee which in the short run is characterized by a downward sloping demand curve and by a vertical supply curve we show that el nino i e positive shocks to enso is beneficial for colombian production and exports and decreases the real price of colombian coffee on the contrary la nina i e negative shocks to enso depresses colombian coffee production and exports and increases price however the overall impact of enso shocks is small both in the short run and in the long run shocks to international demand for colombian coffee are more relevant than supply side shocks in colombia in explaining the dynamics of the price of colombian coffee our results suggest that a given coffee price shock can have beneficial detrimental or negligible effects on the colombian economy depending on its underlying cause as a consequence policy responses to coffee price shocks should be designed by looking at the causes of the shocks

using natural resources for development why has it proven so difficult developing economies have found it hard to use natural resource wealth to improve their economic performance utilizing resource endowments is a multistage economic and political problem that requires private investment to discover and extract the resource fiscal regimes to capture revenue judicious spending and investment decisions and policies to manage volatility and mitigate adverse impacts on the rest of the economy experience is mixed with some successes such as botswana and malaysia and more failures this paper reviews the challenges that are faced in successfully managing resource wealth the evidence on country performance and the reasons for disappointing results

anarchy and its breakdown anarchy defined as a system in which participants can seize and defend resources without regulation from above is not chaos but rather a spontaneous order however anarchy is fragile and may dissolve either into formless amorphy or into a more organized system such as hierarchy under anarchy each contestant balances between productive exploitation of the current resource base and fighting to acquire or defend resources anarchy is sustainable only when there are strongly diminishing returns to fighting effort the decisiveness parameter is sufficiently low and incomes exceed the viability minimum these considerations explain many features of animal and human conflict

growth and violence argument for a per capita measure of civil war the economics literature typically uses counts of casualties as a measure of conflict intensity despite the fact that the units of observation vary considerably in population size when analysing the impact of conflict on economic growth the use of counts relies on the assumption that a given number of casualties affects large and small populations in the same way using within and between country evidence this paper demonstrates that this standard assumption can be rejected a per capita model of conflict intensity that captures local effects of violence provides a more consistent empirical framework for both between country and within country studies

conflict and distribution abstract we develop a behavioral model that links the level and pattern of social conflict to the societywide distribution of individual characteristics the model can be applied to groups that differ in characteristics such as wealth ethnicity religion and political ideology we settle questions of existence and uniqueness of conflict equilibrium conflict is seen to be closely connected with the bimodality of the underlying distribution of characteristics however in general the conflict distribution relationship is nonlinear and surprisingly complex our results on conflict patterns also throw light on the phenomena of extremism and moderation journal of economic literature classification numbers d63 d72 d74

the impact of food prices on conflict revisited abstractstudies that examine the impact of food prices on conflict usually assume that all changes in international food prices are exogenous shocks for individual countries or local areas by is

state capacity conflict and development the absence of state capacities to raise revenue and to support markets is a key factor in explaining the persistence of weak states this paper reports on an ongoing project to investigate the incentive to invest in such capacities the paper sets out a simple analytical structure in which state capacities are modeled as forward looking investments by government the approach highlights some determinants of state building including the risk of external or internal conflict the degree of political instability and dependence on natural resources throughout we link these state capacity investments to patterns of development and growth

the cost of living and terror does consumer price volatility fuel terrorism do fluctuations of consumer prices prompt terrorist activity a latent assumption among conflict scholars is that price volatilities for basic consumer goods produce hardships for people that increase popular grievances damage government legitimacy and raise the chances for terrorism in this study i use a series of regression estimations to test volatility in consumer price indices for energy housing and foods as predictors of domestic and transnational terrorism in a cross section of countries i produce several findings first food price fluctuations are significant predictors of multiple measures of terrorism while energy and housing prices are not second rapid food price increases not decreases promote terrorist attacks third the relationship between food price volatility and terrorism is most consistently present in nondemocratic and hybrid political regimes and in medium human development countries rather than in democracies or in countries characterized by very high or very low economic development

the local impact of mining on poverty and inequality evidence from the commodity boom in peru summary this paper studies the impact of mining activity on socioeconomic outcomes in local communities in peru in the 1990s and 2000s the value of peruvian mining exports grew by 15 times and since the early 2000s one half of fiscal revenues from mining have been devolved to local governments has this boom benefitted people in local communities using the district level poverty map of 2007 the latest available with accurate data on consumption poverty and inequality together with district level data on mining production and fiscal transfers to local governments we present some evidence to answer this question we find that mining districts have larger average consumption per capita and lower poverty rates than otherwise similar districts these positive impacts however decrease drastically with administrative and geographic distance from mining centers moreover consumption inequality within mining districts is higher than in comparable nonproducing districts this dual effect of mining is accounted for by first the better educated immigrants required and attracted by mining activity and second the jobs that some community natives obtain in industries and services related to mining the inequalizing impact of mining both across and within districts may help explain the social discontent with mining in peru despite its enormous revenues an area for future research highlighted in the paper regards the usefulness of fiscal transfers to local governments the mining canon a key component of the fiscal decentralization reform of 2002 we find neither a detrimental nor a beneficial effect from the mining canon in peru whether this is explained by our early measurement of results 5 years into the decentralization program or by the lack of implementation capacity of local governments remains to be answered

workers warriors and criminals social conflict in general equilibrium we incorporate appropriation activities social conflict into canonical models of trade and study how economic shocks and policies affect the intensity of conflict we show that not all shocks that could make society richer reduce conflict positive shocks to labor intensive industries diminish conflict while positive shocks to capital intensive industries increase it the key requirement is that conflict activities be more labor intensive than the economy as this determines how shocks affect the returns and costs of conflict our theory is consistent with several observed patterns of conflict and implies that empirical work should take into account the relative factor intensities of the productive and conflict sectors in each country incorporating appropriation into a canonic general equilibrium model affects what policies may be deemed desirable in order to reduce conflict and generate pareto improvements policy must be distortionary while reforms that appear efficiency enhancing under the unrealistic assumption of perfect property rights may backfire this offers one explanation for why reforms based on traditional models without appropriation may be delayed and become unpopular when implemented and why societies may sympathize with seemingly inefficient redistribution

consequences of unintended food policies food price dynamics subject to the israeli palestinian conflict abstract israel s imposition of military security measures in the palestinian territories as a consequence of the long lasting violent conflict between them has negative economic effects on all parties concerned one crucial outcome is the limited ability to carry out trade which brings about welfare losses conflict induced policies such as security measures can result in sizable unintended externalities that shape the markets of and the trade in food we assess the dynamics of daily wholesale prices of food produced in israel and the west bank that is traded between them and is therefore subject to restrictions on movement to do so we suggest a regime switching cointegration model which is estimated using a novel extension of the johansen estimation method we find that the two major wholesale markets of the two regions are integrated with regard to these main trading products deviations from price equilibria are quickly adjusted the model suggests that movement restrictions temporarily cut off markets from each other implications of conflict induced closures for welfare depend on the direction of trade and are harming both palestinian and israeli consumers

endogeneity in count data models an application to demand for health care the generalized method of moments gmm estimation technique is discussed for count data models with endogenous regressors count data models can be specified with additive or multiplicative errors and it is shown that in general a set of instruments is not orthogonal to both error types simultaneous equations with a dependent count variable often do not have a reduced form which is a simple function of the instruments however a simultaneous model with a count and a binary variable can only be logically consistent when the system is triangular utilizing data from the british health and lifestyle survey 1991 1992 the gmm estimator is used in the estimation of a model explaining the number of visits to doctors with a self reported binary health index as a possible endogenous regressor if this regressor is truly endogenous one expects the pseudo likelihood estimate of its coefficient to be biased upwards indeed for the additive model the estimated coefficient of the binary health index decreases in value when the possible endogeneity of this regressor is taken into account further indication of endogeneity is given by the fact that the overidentifying restrictions are rejected in the multiplicative model but not in the additive model finally a model that includes predicted latent health instead of the binary health index is estimated in stages

the monopoly of violence evidence from colombia many states in latin america africa and asia lack the monopoly of violence even though this was identified by max weber as the foundation of the state and thus the capacity to govern effectively in this paper we develop a new perspective on the establishment of the monopoly of violence we build a model to explain the incentive of central states to eliminate nonstate armed actors paramilitaries in a democracy the model is premised on the idea that paramilitaries may choose to and can influence elections since paramilitaries have preferences over policies this reduces the incentives of the politicians they favor to eliminate them we then investigate these ideas using data from colombia between 1991 and 2006 we first present regression and case study evidence supporting our postulate that paramilitary groups can have significant effects on elections for the legislature and the executive next we show that the evidence is also broadly consistent with the implication of the model that paramilitaries tend to persist to the extent that they deliver votes to candidates for the executive whose preferences are close to theirs and that this effect is larger in areas where the presidential candidate would have otherwise not done as well finally we use roll call votes to illustrate a possible quid pro quo between the executive and paramilitaries in colombia language en

resource windfalls political regimes and political stability abstract we study theoretically and empirically whether natural resource windfalls affect political regimes we show that windfalls have no effect on democracies while they have heterogeneous political consequences in autocracies in deeply entrenched autocracies the effect of windfalls is virtually nil while in moderately entrenched autocracies windfalls significantly exacerbate the autocratic nature of the political system to frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability and potential challengers decide whether to try to unseat the incumbents the model uncovers a mechanism for the asymmetric impact of resource windfalls on democracies and autocracies as well as the the differential impact within autocracies

does food security matter for transition in arab countries abstract expectations are high that transition in tunisia egypt libya and yemen will bring about more freedom justice and economic opportunities however experiences from other world regions show that countries in transition are at high risk of entering conflicts which often come at large economic social and political costs in order to identify options on how conflict may be prevented in arab transition countries this paper assesses the key global drivers of conflicts based on a dataset from 1960 to 2010 and improved cross country regression techniques results show that unlike in other studies where per capita incomes inequality and poor governance among other factors emerge as the major determinants of conflict food security at macro and household levels emerges as the main cause of conflicts in the arab world the high exposure of arab countries to global food price variations proves to be an important source of vulnerability for a peaceful arab transition if history is also a guide to the future improving food security is not only important for improving the lives of rural and urban people it is also likely to be the key for a peaceful transition the paper concludes with a set of policy options on how to improve food security at macro and household levels including safeguard mechanisms against excessive price volatility export led and pro poor growth the creation expansion of social safety nets and targeted nutrition programs

war and conflict in economics theories applications and recent trends we review the main economic models of war and conflict these models vary in details but their implications are qualitatively consistent highlighting key commonalities across a variety of conflict settings recent empirical literature employing both laboratory and field data in many cases confirms the basic implications of conflict theory however this literature also presents important challenges to the way economists traditionally model conflict we finish our review by suggesting ways to address these challenges

persistent commodity shocks and transitory crime effects abstract this paper studies the dynamic response of crime to a positive income shock we estimate the short and medium run effects that an increase in copper price had on the local economy and on criminal activity in chile which is the world s leading copper producer after a decade of high prices mining municipalities did not exhibit lower crime rates compared to non mining municipalities to explain this counterintuitive result we investigated heterogeneous dynamic effects and observed that property crimes decreased only at the beginning of the boom as the dynamics of unskilled employment are consistent with the crime cycle we argue that crime evolves due to temporary labor market adjustments

implications of an economic theory of conflict hindu muslim violence in india we model intergroup conflict driven by economic changes within groups we show that if group incomes are low increasing group incomes raises violence against that group and lowers violence generated by it we then apply the model to data on hindu muslim violence in india our main result is that an increase in per capita muslim expenditures generates a large and significant increase in future religious conflict an increase in hindu expenditures has a negative or no effect these findings speak to the origins of hindu muslim violence in post independence india

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

foods and fads the welfare impacts of rising quinoa prices in peru abstract riding on a wave of interest in superfoods in rich countries quinoa went in less than a decade from being largely unknown outside of south america to being an upper class staple in the united states the united kingdom and elsewhere as a result concerned commentators suggested that the rising international demand for quinoa which tripled prices might have substantially harmed peruvian quinoa consumers we study the impacts of rising quinoa prices on the welfare of peruvian households our analysis suggests these fears are unwarranted a descriptive analysis shows that quinoa is a small part

on the origins of the state stationary bandits and taxation in eastern congo a positive demand shock for coltan a mineral whose bulky output cannot be concealed leads armed actors to create illicit customs and provide protection at coltan mines where they settle as stat

political economy of dynamic resource wars abstract the political economy of exhaustible resource extraction is analysed in three contexts first if an incumbent faces a threat of being removed once and for all by a rival faction extraction becomes more voracious if the factions do not share rents equally second perennial political conflict cycles are more inefficient if constitutional cohesiveness or the partisan in office bias is large and political instability is high third resource wars are more intense if constitutional cohesiveness is weak the incumbent has a partisan in office bias reserves of resources are high the wage is low governments can be less frequently removed from office and fighting technology has less decreasing returns to scale resource depletion in such wars is more rapacious if there is more government instability the political system is less cohesive and the partisan in office bias is smaller

knowledge information and retirement saving decisions evidence from a large scale intervention in chile all over the world retirement income depends increasingly on individuals savings choices over their lifetime while government sponsored retirement schemes like the u s social security system provide a reasonable stream of resources for old age middle and high income workers are expected to make their own additional savings arrangements either through employer sponsored pension plans matching contribution schemes such as the 401 k plans in the united states or individual savings through tax favored investment vehicles 1to adequately plan for retirement individuals need information about their current situation the different choices available to them and some minimal mathematical and abstraction capabilities to properly process this information there is growing concern however regarding the low level of financial literacy among the general population the baby boomer generation does not seem to have accumulated sufficient financial wealth beyond housing with particularly low asset levels for female headed households 2 even if the lack of financial sophistication could be overcome by the use of retirement planning services the existing evidence suggests that these services are rarely sought and when they are it is mostly by individuals with initially higher levels of financial literacy 3 furthermore individuals with less exposure to financial planning tend to make wrong choices saving less than required in poorly diversified portfolios or not profiting from tax favored instruments 4in a defined contribution scheme the level of the benefit is not known beforehand and individuals face uncertainty about how their current savings will translate into future benefits in this setting one key piece of information that individuals need to make active decisions to improve their retirement wealth is the pension level they are expected to receive given their current financial wealth and their historical saving behavior assuming that individuals can reasonably form an expectation of the income level they would like to receive in old age the comparison between desired and projected income could induce them to save more transfer their wealth into more conservative or aggressive portfolios postpone retirement or seek retirement planning advice while it is always possible to make these adjustments the effectiveness of these choices depends on the time horizon until retirement while small changes when one is young can have a large impact on retirement individuals with low asset levels can do little to improve their situation as they approach retirement age except perhaps postpone their exit from the labor force in this article we exploit a large scale natural experiment to analyze the impact of a personalized pension projection ppp which was sent to practically all chilean active dependent workers in july 2005 on their retirement saving behavior the objective of this intervention was to simplify the information received by pension system members to help them make better decisions in essence we compare the saving behavior of individuals during the first twelve months after they received the ppp with that of comparable individuals who were not sent this statement due to some specific administrative rules we use this analysis to address two different issues first if individuals were well aware of their current financial stance receipt of this information should have no effect on their retirement related saving behavior our analysis serves as a test of the full information hypothesis second the large scope of the intervention allows us to look at different subgroups of the population as mentioned above the age dimension is particularly important since the possibility of correcting misalignments between expectations and projections depends crucially on the time horizon until retirement the gender dimension is also important for the chilean case as the actuarial nature of the chilean pension system tends to directly translate gender differences in the labor market into differences in their old age income chilean women tend to work less frequently receive lower wages for a comparable job retire earlier and live longer

repression or civil war perhaps the crowning achievement of mature democracies is the peaceful acceptance of the ballot box as the primary instrument for deciding who should hold power in society we do not have to go far back in the history of most democratic states however to find a distinct role for political violence moreover many inhabitants of the globe still remain at risk of falling prey to widespread violence in the struggle for political office forms of political violence differ a great deal we focus on two important manifestations repression and civil war distinguished by whether violence is one sided or two sided we present a unified approach to studying these forms of political violence with common roots in poverty natural resource rents and weak political institutions first we lay out rudimentary model to analyze whether violence will occur and if so manifest itself as repression or civil war three regimes peace repression and civil war emerge as alternative equilibrium outcomes in the interaction between an incumbent government and an opposition group moreover the theory suggests a natural ordering of these regimes we then construct empirical measures of repression and civil war which we map into ordered variables as suggested by the theory we investigate how the regime depends on economic and political variables using an ordered logit model defined over the three regimes our estimation results indicate a strong correlation between low incomes weak political institutions and both forms of political violence

diamonds are forever wars are not is conflict bad for private firms this paper studies the relationship between civil war and the value of firms in a poor resource abundant country using microeconomic data for angola we focus on diamond mining firms and conduct an event study on the sudden end of the conflict marked by the death of the rebel movement leader in 2002 we find that the stock market perceived this event as bad news rather than good news for companies holding concessions in angola as their abnormal returns declined by 4 percentage points the event had no effect on a control portfolio of otherwise similar diamond mining companies this finding is corroborated by other events and by the adoption of alternative methodologies we interpret our findings in light of conflict generated entry barriers government bargaining power and transparency in the licensing process jel d74 g32 o13 o17 q34

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

global factors uncertainty weather conditions and energy prices on the drivers of the duration of commodity price cycle phases abstract we investigate the role of global factors in explaining the length of commodity price cycle phases using a continuous time weibull duration model and data for a panel of 33 countries over the period 1980q1 2015q4 we find evidence of increasing constant positive duration dependence for commodity price booms and busts normal time spells global macroeconomic conditions in particular inflation economic policy uncertainty and monetary policy actions significantly affect the duration of all commodity price cycle phases global environmental conditions also impact the duration of commodity price booms with a rise in average temperature rainfall increasing reducing their length a rise in the number of military conflicts around the globe is associated with shorter booms and busts finally we find that a rise in oil prices is linked with longer booms and shorter busts

mining matters natural resource extraction and firm level constraints abstract we estimate the impact of local mining activity on the business constraints experienced by 25 777 firms across nine large and resource rich countries we find that the presence of active mines in firms immediate vicinity

economic shocks and crime evidence from the crash of ponzi schemes abstract in november 2008 colombian authorities dismantled a network of ponzi schemes making hundreds of thousands of investors lose tens of millions of dollars throughout the country using original data on the geographical incidence of the ponzi schemes this paper estimates the impact of their breakdown on crime we find that the crash of ponzi schemes differentially exacerbated crime in affected districts confirming the intuition of the standard economic model of crime this effect is only present in places with relatively weak judicial and law enforcement institutions and with little access to consumption smoothing mechanisms such as microcredit in addition we show that with the exception of economically motivated felonies such as robbery violent crime is not affected by the negative shock

the resource curse and its potential reversal several recent papers suggest that the negative association between natural resource intensity and economic growth can be reversed if institutional quality is high enough we try to understand this result in more detail by decomposing the resource measure using alternative measures of both resources and institutions and by studying different time periods while an institutional reversal is present in many specifications only ores and metals interacted with the icrg measure of institutional quality consistently have a negative growth effect but a positive interaction that turns the curse around when institutions are good enough

the inefficient use of power costly conflict with complete information recent work across a wide range of issues in political economy as well as in american comparative and international politics tries to explain the inefficient use of power revolutions civil wars high levels of public debt international conflict and costly policy insulation in terms of commitment problems this paper shows that a common mechanism is at work in a number of these diverse studies this common mechanism provides a more general formulation of a type of commitment problem that can arise in many different substantive settings the present analysis then formalizes this mechanism as an inefficiency condition that ensures that all of the equilibria of a stochastic game are inefficient this condition has a natural substantive interpretation large rapid changes in the actors relative power measured in terms of their minmax payoffs may cause inefficiency

uneven growth a framework for research in development economics the textbook paradigm of economy wide development rests on the premise of balanced growth that is on the presumption that all sectors will grow in unison over time as a country gets richer this view has served us reasonably well in some circumstances but is not particularly useful for accounts of modern under development in many developing countries economic growth has been fundamentally uneven software development the outsourcing of services sectoral technological change quick compositional shifts between agriculture and other sectors the rise of particular exports special economic zones and so on this paper will discuss both the sources of uneven growth and its implications with greater emphasis on the latter the paper will argue that much of the distributional issues or the reactions to globalization that we see in modern developing societies can be viewed as reactions to a growth process that is fundamentally uneven and is indeed perceived as such

the information technology revolution and the stock market technological progress comes in waves the british industrial revolution 1760 1850 ushered in cort s puddling and rolling process for making iron crompton s mule for spinning cotton and the watt steam engine the second industrial revolution 1890 1930 witnessed the rise of electricity the internal combustion engine and the chemical industry the birth of information technology it may herald the start of a third industrial revolution a new technology or product is often developed by the single entrepreneur who initially finds it hard to get funds develop the product and find customers but if the product is good customers eventually line up and investors flock in other firms then move in to make the product and may drive the innovator out or acquire him whether he reaches the initial public offering ipo stage or is acquired by a listed firm though it takes time for the innovator to add value to the stock market indeed the innovation may at first reduce the market s value because some firms usually large or old will cling to old technologies that have lost their momentum figure 1 plots the market value of u s equity relative to gdp this paper argues that a the market declined in the late 1960 s because it felt that the old technologies either had lost their momentum or would give way to it and that b it innovators boosted the stock market s value only in the 1980 s if the stock market provides a forecast of future events then the recent dramatic upswing represents a rosy estimate about growth in future profits for the economy this translates into a forecast of higher output and productivity growth holding other things equal such as capital s share