Controlling for Import Price Effects in Civil War Regressions

Abstract

Several studies estimate the effects of commodity export prices on economic outcomes, such as conflict and democratic transitions. In this note, we argue that it is important to control for the effects of import prices due to two reasons. First, economic theory predicts that both import and export prices affect the economy's performance, which can, in turn, affect its conflict propensity. Second, the facts that import prices might affect the conflict risk and that import and export prices can be correlated imply that the failure to control for import price effects can bias the export price coefficients. We illustrate these points using the dataset and one of the regression specifications in a recent civil war study.