Drugs and Violence in Afghanistan: A Panel VAR with Unobserved Common Factor Analysis
This paper addresses the relationship between the level of violence and the opium market in Afghanistan’s provinces. We first provide an overview of the nature and extent of the Afghan drug trafficking. This is followed by a VAR analysis of the nexus opium-insurgency activities using monthly time-series data on opium prices and the number of security incidents for 15 Afghan provinces over the period 2004-2009. We use a multifactor error structure, the Common Correlated Effect (CCE), to include unobservable common factors; Impulse Response functions to describe the time path of the dependent variables in response to shocks; and the Mean Group Estimator to summarize our results across the provinces. Results suggest a conflict-induced reduction in opium prices, while the reverse opium-violence mechanism is mostly negligible. Moreover, unobservable common factors are the main drivers of opium prices and violence.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Markus Brückner & Antonio Ciccone, 2010.
"International Commodity Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa,"
Royal Economic Society, vol. 120(544), pages 519-534, 05.
- Markus Brückner & Antonio Ciccone, 2007. "International commodity prices, growth and the outbreak of Civil War in Sub-Saharan Africa," Economics Working Papers 1053, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2009.
- Markus Brückner & Antonio Ciccone, 2009. "International Commodity Prices, Growth, and the Outbreak of Civil War in Sub-Saharan Africa," Working Papers 2009-37, FEDEA.
- Georges Bresson & Badi H. Baltagi & Alain Pirotte, 2007. "Panel unit root tests and spatial dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 339-360.
- Baltagi B-H & Bresson G. & Pirotte A., 2005. "Panel Unit Root Tests and Spatial Dependence," Working Papers ERMES 0503, ERMES, University Paris 2.
- Badi H. Baltagi & Georges Bresson & Alain Pirotte, 2006. "Panel Unit Root Tests and Spatial Dependence," Center for Policy Research Working Papers 88, Center for Policy Research, Maxwell School, Syracuse University.
- James D. Fearon, 2005. "Primary Commodity Exports and Civil War," Journal of Conflict Resolution, Peace Science Society (International), vol. 49(4), pages 483-507, August.
- Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
- Pesaran, M.H. & Smith, R., 1992. "Estimating Long-Run Relationships From Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9215, Faculty of Economics, University of Cambridge.
- Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
- Tom Doan, "undated". "IPSHIN: RATS procedure to implement Im, Pesaran and Shin panel unit root test," Statistical Software Components RTS00098, Boston College Department of Economics.
- M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
- Pesaran, M.H., 2003. "A Simple Panel Unit Root Test in the Presence of Cross Section Dependence," Cambridge Working Papers in Economics 0346, Faculty of Economics, University of Cambridge.
- Jo Thori Lind & Karl Ove Moene & Fredik Willumsen, 2014. "Opium for the Masses? Conflict-Induced Narcotics Production in Afghanistan," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 949-966, December.
- Lind, Jo Thori & Moene, Karl Ove & Willumsen, Fredrik, 2009. "Opium for the Masses? Conflict-induced Narcotics Production in Afghanistan," Memorandum 05/2009, Oslo University, Department of Economics.
- Jo Thori Lind & Karl Ove Moene & Fredrik Willumsen, 2009. "Opium for the Masses? Conflict-Induced Narcotics Production in Afghanistan," CESifo Working Paper Series 2573, CESifo Group Munich.
- Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
- Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
- Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-921, September. Full references (including those not matched with items on IDEAS)