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Estimating the Peace Dividend:The Impact of Violence on HousePrices in Northern Ireland

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  • Timothy Besley
  • Hannes Mueller

Abstract

This paper exploits data on the pattern of violence across regions and over time toestimate the impact of the peace process in Northern Ireland on house prices. Webegin with a linear model that estimates the average treatment effect of a conflictrelatedkilling on house prices - showing a negative correlation between house pricesand killings. We then develop an approach based on an economic model where theparameters of the statistical process are estimated for a Markov switching modelwhere conflict and peace are treated as a latent state. From this, we are able toconstruct a measure of the discounted number of killings which is updated in thelight of actual killings. This model naturally suggests a heterogeneous effect ofkillings across space and time which we use to generate estimates of the peacedividend. The economic model suggests a somewhat different pattern of estimates tothe linear model. We also show that there is some evidence of spillover effects ofviolence in adjacent regions.

Suggested Citation

  • Timothy Besley & Hannes Mueller, 2009. "Estimating the Peace Dividend:The Impact of Violence on HousePrices in Northern Ireland," STICERD - Economic Organisation and Public Policy Discussion Papers Series 011, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stieop:011
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    More about this item

    Keywords

    Peace Dividend; Northern Ireland; Conflict; Housing Price; Markov Chain;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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