Estimating the Peace Dividend:The Impact of Violence on HousePrices in Northern Ireland
AbstractThis 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.
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Date of creation: May 2009
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Peace Dividend; Northern Ireland; Conflict; Housing Price; Markov Chain;
Other versions of this item:
- Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-33, April.
- Tim Besley & Hannes Mueller, 2009. "Estimating the peace dividend: the impact of violence on house prices in Northern Ireland," IFS Working Papers W09/18, Institute for Fiscal Studies.
- Timothy Besley & Hannes Mueller, 2009. "Estimating the peace dividend: the impact of violence on house prices in Northern Ireland," LSE Research Online Documents on Economics 25427, London School of Economics and Political Science, LSE Library.
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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