Shanker Satyanath

Economic Shocks and Civil Conflict: An Instrumental Variables Approach

Estimating the impact of economic conditions on the likelihood of civil conflict is difficult because of endogeneity and omitted variable bias. We use rainfall variation as an instrumental variable for economic growth in 41 African countries during 1981–99. Growth is strongly negatively related to civil conflict: a negative growth shock of five percentage points increases the likelihood of conflict by one‐half the following year. We attempt to rule out other channels through which rainfall may affect conflict. Surprisingly, the impact of growth shocks on conflict is not significantly different in richer, more democratic, or more ethnically diverse countries.

Warming increases the risk of civil war in Africa

Armed conflict within nations has had disastrous humanitarian consequences throughout much of the world. Here we undertake the first comprehensive examination of the potential impact of global climate change on armed conflict in sub-Saharan Africa. We find strong historical linkages between civil war and temperature in Africa, with warmer years leading to significant increases in the likelihood of war. When combined with climate model projections of future temperature trends, this historical response to temperature suggests a roughly 54% increase in armed conflict incidence by 2030, or an additional 393,000 battle deaths if future wars are as deadly as recent wars. Our results suggest an urgent need to reform African governments and foreign aid donors policies to deal with rising temperatures.

Incorporating Climate Uncertainty into Estimates of Climate Change Impacts

Quantitative estimates of the impacts of climate change on economic outcomes are important for public policy. We show that the vast majority of estimates fail to account for well-established uncertainty in future temperature and rainfall changes, leading to potentially misleading projections. We reexamine seven well-cited studies and show that accounting for climate uncertainty leads to a much larger range of projected climate impacts and a greater likelihood of worst-case outcomes, an important policy parameter. Incorporating climate uncertainty into future economic impact assessments will be critical for providing the best possible information on potential impacts.

Institutions, Expectations, and Currency Crises

Currency crises are costly phenomena that have been exceptionally difficult to explain and predict. We comprehensively examine the relationship between political institutions and currency crises and emphasize the causal linkage between institutions, expectations, and crises. Specifically, we argue that institutional variables—particularly divided government and government turnover—increase the variance of expectations held by speculators thereby increasing the likelihood of currency crises. We test these hypotheses using three existing economic models of currency crises and find that institutional variables are not only statistically significant, but also substantially improve the ability of these models to forecast crises.We are grateful to Helen Milner, Charles Cameron, William Bernhard, and seminar participants at the University of Wisconsin and the University of Southern California for helpful comments. Lisa Martin and our referees provided feedback that helped dramatically improve our arguments and exposition. Andy Rose, Steve Kamin, Mathieu Bussiere, and Marcel Fratzscher generously provided data and advice that helped us replicate their findings. David Leblang acknowledges financial support from the National Science Foundation (SES-0136866).

CIVIL WAR EXPOSURE AND VIOLENCE

In recent years scholars have begun to focus on the consequences of individuals exposure to civil war, including its severe health and psychological consequences. Our innovation is to move beyond the survey methodology that is widespread in this literature to analyze the actual behavior of individuals with varying degrees of exposure to civil war in a common institutional setting. We exploit the presence of thousands of international soccer (football) players with different exposures to civil conflict in the European professional leagues, and find a strong relationship between the extent of civil conflict in a players home country and his propensity to behave violently on the soccer field, as measured by yellow and red cards. This link is robust to region fixed effects, country characteristics (e.g. rule of law, per capita income), player characteristics (e.g. age, field position, quality), outliers, and team fixed effects. Reinforcing our claim that we isolate the effect of civil war exposure rather than simple rule breaking or something else entirely, there is no meaningful correlation between our measure of exposure to civil war and soccer performance measures not closely related to violent conduct. The result is also robust to controlling for civil wars before a players birth, suggesting that it is not driven by factors from the distant historical past.

Climate robustly linked to African civil war

We previously documented a link between climate variation and historical civil wars in sub-Saharan Africa (1). Buhaug (2) disputes this link, generating a series of animated news reports. The relationship between climate and conflict is an important topic that deserves careful scientific scrutiny, but we believe Buhaugs approach is undermined by basic econometric mistakes, leading to what is currently an unhelpful debate. We briefly describe two main shortcomings in his analysis here, with a full analysis available as a working paper (3).

What Determines Long-Run Macroeconomic Stability? Democratic Institutions

We examine the deep determinants of long-run macroeconomic stability in a cross-country framework. We find that conflict, openness, and democratic political institutions have a strong and statistically significant causal impact on macroeconomic stability. Surprisingly the most robust relationship of the three is for democratic institutions. A one standard deviation increase in democracy can reduce nominal instability nearly fourfold. This impact is robust to alternative measures of democracy, samples, covariates, and definitions of conflict. It is particularly noteworthy that a variety of nominal pathologies discussed in the recent macroeconomic literature, such as procyclical policy, original sin, and debt intolerance, have common origins in weak democratic institutions. We also find evidence that democratic institutions both strongly influence monetary policy and have a strong, independent positive effect on stability after controlling for various policy variables.

Bowling for Fascism: Social Capital and the Rise of the Nazi Party

Using newly collected data on association density in 229 towns and cities in interwar Germany, we show that denser social networks were associated with faster entry into the Nazi Party. The effect is large: one standard deviation higher association density is associated with at least 15 percent faster Nazi Party entry. Party membership, in turn, predicts electoral success. Social networks thus aided the rise of the Nazis that destroyed Germany’s first democracy. The effects of social capital depended on the political context: in federal states with more stable governments, higher association density was not correlated with faster Nazi Party entry.

Bowling for Fascism: Social Capital and the Rise of the Nazi Party in Weimar Germany, 1919-33

Social capital - a dense network of associations facilitating cooperation within a community - typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially dark side of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Partys triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations - veteran associations and non-military clubs, bridging and bonding associations - positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germanys first democracy.

Reply to Sutton et al.: Relationship between temperature and conflict is robust

In a recent paper, we documented strong historical linkages between temperature and civil conflict in Africa (1). Sutton et al. (2) raise two concerns with our findings: that the relationship between temperature and war is based on common trends and is therefore spurious, and that our model appears overly sensitive to small specification changes. Both concerns reflect a basic misunderstanding of the analysis.