The statistical robustness to controlling for country fixed effects is an important reassurance that the relationship between conflict history and poverty is not solely due to a host of omitted variables at the country level. Controlling for continent/time fixed effects does not alter the size of the coefficient substantially. This implies that poverty in some countries deviates from the regional average in line with conflict debt. Still, we will need to interpret the coefficient carefully, keeping in mind that the link between conflict and poverty could be driven by other factors which affect both.

|_Ta_|_ble 1: Poverty Ra_<br>|_te and Conflict Hi_<br>|_story_<br>||
|---|---|---|---|---|
||(1)<br>Povertyrate|(2)<br>Povertyrate|(3)<br>Povertyrate|(4)<br>Povertyrate|
|Conflict debt|8.372***|7.971***|1.767**|1.455*|
||(0.970)|(0.943)|(0.877)|(0.856)|
|Country fixed effects|No|No|Yes|Yes|
|Time fixed effects|No|Yes|Yes|No|
|Continent-time fixed effects|No|No|No|Yes|
|Adjusted R-squared|0.0502|0.0800|0.277|0.421|
|Observations|3238|3238|3238|3238|

Notes: Robust standard errors clustered at the country level in parentheses. * p<0.1, ** p<0.05, *** p<0.01. The dependent variable is poverty rate (in percent), interpolated linearly to replace missing values between two data points. Conflict debt is the discounted history of conflict years where a conflict year is defined as by more than 0.08 fatalities per 1,000 population. We use average population to avoid time variation in the denominator of the indicator. Average population is computed from available years in the World Bank data. Continent-time fixed effects are a dummy for every year on every continent. Continent here are 7 world regions. Regressions are on unbalanced cross-country sample during 1989-2018.

An additional, immediate concern in Table 1 is reverse causality where poverty leads to conflict and not the other way around. And indeed, the robust relationship between conflict debt and poverty rates shown in Table 1 is still present if we use a simple dummy for contemporaneous conflict – as shown in Table 2. However, in Appendix Table A2 we show that the association between conflict debt and the poverty rate is robust to controlling for contemporaneous conflict whereas the reverse is not true. Countries with large conflict debts suffer from poverty but, controlling for this debt, there is no association between poverty and armed conflict. Also, in column (4) of Table 2, we see that contemporaneous conflict loses its size and significance when controlling for continent time fixed effects. This means that poverty rates are stronger related to past conflict than to present conflict which implies that reverse causality cannot be the main driver of the correlations shown in Table 1.

||_Table 2: Pov_<br>|_erty Rate and Con_<br>|_flict_<br>||
|---|---|---|---|---|
||(1)<br>Povertyrate|(2)<br>Povertyrate|(3)<br>Povertyrate|(4)<br>Povertyrate|
|Conflict year|17.16***|15.44***|2.350**|0.606|
||(3.347)|(3.216)|(1.058)|(1.008)|
|Country fixed effects|No|No|Yes|Yes|
|Time fixed effects|No|Yes|Yes|No|
|Continent-time fixed effects|No|No|No|Yes|
|Adjusted R-squared|0.0145|0.0463|0.271|0.417|
|Observations|3238|3238|3238|3238|

Notes: Robust standard errors clustered at the country level in parentheses. * p<0.1, ** p<0.05, *** p<0.01. The dependent variable is poverty rate (in percent), interpolated linearly to replace missing values between two data points. A conflict year is defined by a year with 0.08 fatalities per 1,000 population. We use average population to avoid time variation in the denominator of the indicator. Average population is computed from available years in the World Bank data. Continent-time fixed effects are a dummy for every year on every continent. Regressions are on unbalanced cross-country sample during 1989-2018.

There is an important intensive margin in the relationship between conflict debt and poverty. A heavier debt burden is associated with higher poverty rates even when we only differentiate between country/years with a conflict debt. The heavier the debt weighs, the higher is poverty (Appendix Table 12