Nicolas Berman

External Shocks, Internal Shots: The Geography of Civil Conflicts

We use georeferenced information on the location of violent events in sub-Saharan African countries and provide evidence that external income shocks are important determinants of the intensity and geography of civil conflicts. More precisely, we find that (a) the incidence, intensity, and onset of conflicts are generally negatively and significantly correlated with income variations at the local level; (b) this relationship is significantly weaker for the most remote locations; and (c) at the country level, these shocks have an insignificant impact on the overall probability of conflict outbreak but do affect the probability that conflicts start in the most opened regions.

Time to ship during financial crises

We show that the negative impact of financial crises on trade is magnified for destinations with longer time-to-ship. A simple model where exporters react to an increase in the probability of default of importers by increasing their export price and decreasing their export volumes to destinations in crisis is consistent with this empirical finding. For longer shipping time, those effects are indeed magnified as the probability of default increases as time passes. Some exporters also decide to stop exporting to the crisis destination, the more so the longer time-to-ship. Using aggregate data from 1950 to 2009, we found that this magnification effect is robust to alternative specifications, samples and inclusion of additional controls, including distance. The form level predictions are also broadly consistent with French exporter data from 1995 to 2005.

Debt denomination, exchange-rate variations and the margins of trade

Using firm-level data, we find that a currency depreciation has two opposite effects on exports when firms are indebted in foreign currency: (i) a pro-competitive effect that increases both the amount of exports by firm (the intensive margin) and the number of firms (the extensive margin); and (ii) a balance-sheet effect that forces some firms to exit the export market and decreases the extensive margin. These results both provide an explanation for the negative reactions of trade after recent emerging market crises and document a finance-based empirical microfoundation to the ‘exchange-rate disconnect puzzle’.