Price shocks and political conflict
Author's Department
Economics Department
Document Type
Research Article
Publication Title
International Journal of Development and Conflict
Publication Date
12-1-2017
Abstract
Copyright © Samer Atallah. How would the recent decline in oil prices affect the political equilibrium in resource exporting countries? This paper investigates the impact of negative price shocks on the emergence of conflict or on maintaining a political bargain in these countries. Conflict is a threat of revolution conducted by ruled citizens against oppressing elites. The probability of a successful revolution depends on the revolution effort exerted by citizens and oppression effort exerted by elites. It is also affected by the level of income inequality. To avoid conflict, citizens and elites bargain to determine an optimal transfer rate from resource rents. Negative price shocks reduce the probability of conflict and increase the probability of a successful bargain between citizens and elites. It also reduces the cost of transfers from elites to citizens. Negative price shocks reduce citizens’ welfare. Results of the empirical analysis support the findings of the model. Also, it supports the hypothesis that better institutional quality reduces the effect of price shocks.
First Page
65
Last Page
80
Recommended Citation
APA Citation
Atallah, S.
(2017). Price shocks and political conflict. International Journal of Development and Conflict, 7(2), 65–80.
https://fount.aucegypt.edu/faculty_journal_articles/551
MLA Citation
Atallah, Samer
"Price shocks and political conflict." International Journal of Development and Conflict, vol. 7,no. 2, 2017, pp. 65–80.
https://fount.aucegypt.edu/faculty_journal_articles/551