THE IMPACT OF EXTREME WEATHER ON CIVIL CONFLICT

Economic Journal: Droughts in China have historically been more likely to trigger peasant revolts than floods, according to research by Professor Ruixue Jia, published in the March 2014 issue of the Economic Journal. Her study finds that while both kinds of ‘weather shock’ significantly raised the prices of grains (wheat and rice), the price effect of droughts was nearly three times that of floods. The introduction of sweet potatoes, a drought-resistant crop from the Americas, led to a considerable reduction in civil conflict.

How Australia's Mining Boom Changed Perth And Its People

Business Insider: Perth is now officially the most expensive state capital to rent a house...

Commodity-Price Comovement and Global Economic Activity

NBER WP: Guided by the predictions of a general-equilibrium macroeconomic model with commodity prices, we apply a new factor-based identification strategy to decompose the historical sources of changes in commodity prices and global economic activity. The model yields a factor structure for commodity prices in which the factors have an economic interpretation: one factor captures the combined contribution of all aggregate shocks that affect commodity markets only through general equilibrium effects while other factors represent direct shocks to commodity markets. The model also provides identification conditions to recover the structural interpretation from a factor decomposition of commodity prices. We apply these methods to a cross-section of real commodity prices since 1968. The theoretical restrictions implied by the model are consistent with the data and thus yield a structural interpretation of the common factors in commodity prices. The analysis indicates that commodity-related shocks have contributed only modestly to global business cycle fluctuations.

Dutch Disease and the Oil and Boom and Bust

OxCarre WP by Brock Smith: This paper examines the impact of the oil price boom in the 1970s and the subsequent bust on non-oil economic activity in oil-dependent countries. During the boom, manufacturing value added and exports increased significantly relative to non-oil dependent countries, along with wages, employment and investment. These measures decreased, though to a lesser extent, during the bust, displaying a positive relationship with oil prices. In contrast with the Dutch Disease model, exportable manufacturing sectors grew faster than non-exportable ones. However, exports of non-hydrocarbon natural resources and agricultural products displayed a strongly negative relationship to prices. The results suggest a push towards industrialization induced by the oil revenue windfall.

The limited economic impact of the US shale gas boom

VoxEU: The US unconventional energy boom has reversed the decline of domestic production, lowered oil and gas imports, reduced gas prices, and created political space for tougher regulations on coal-fired power plants. This column argues that it is not a panacea, however. Even if current estimates prove accurate, the long-run benefits to the US economy will be relatively small. Improving energy efficiency and promoting low-carbon technologies will be just as important as before – especially for the EU, given its more limited known reserves of unconventional oil and gas.

Managing Natural Resources: Should we Really Listen to People?

WB: Few would argue against the need for policymakers to listen to people’s views when it comes to the good management of natural resources. Indeed, if there is one thing that has been stressed from the countless global experiences of mismanagement, it is the need to involve citizens in decision-making processes...

Regional Favoritism

QJE: We complement the literature on distributive politics by taking a systematic look at regional favoritism in a large and diverse sample of countries, and by employing a broad measure that captures the aggregate distributive effect of many different policies. In particular, we use satellite data on nighttime light intensity and information about the birthplaces of the countries' political leaders. In our panel of 38,427 subnational regions from 126 countries with yearly observations from 1992 to 2009, we find that subnational regions have more intense nighttime light when being the birth region of the current political leader. We argue that this finding provides evidence for regional favoritism. We explore the dynamics and the geographical extent of regional favoritism, and show that regional favoritism is most prevalent in countries with weak political institutions and poorly educated citizens. Further, foreign aid inflows and oil rents tend to fuel regional favoritism in weakly institutionalized countries, but not elsewhere.