Development and large scale violence
A single equation model is inadequate to capture the various transmission channels linking civil war to per-capita income. Therefore, this paper uses a system of four equations to estimate the economic cost of civil conâ€¡ ict. In the system, conâ€¡ is allowed ict to aÂ¤ect per-capita income both directly and indirectly through its eÂ¤ect on a set of â€œdeep determinantsâ€ of income. Estimates indicate that the income loss associated with conâ€¡ is ict economically sizeable and that slightly less than half of this loss arises from the deterioration of institutions. Eventually, the economy rebounds, recovering about one half of the initial loss.
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