Economic Shocks and Civil Conflict: An Instrumental Variables Approach
Determining the impact of poverty on the likelihood of civil conflict in less developed countries is difficult because of omitted variable bias and endogeneity. We use exogenous weather variation -- as measured in satellite vegetation readings -- as an instrumental variable for economic growth in 40 Sub-Saharan African countries during 1983-1999, and estimate that economic growth is strongly negatively related to the incidence of civil conflict: a negative growth shock of 5…