eprintid: 21941
rev_number: 15
eprint_status: archive
userid: 2744
dir: disk0/00/02/19/41
datestamp: 2016-10-07 09:36:39
lastmod: 2016-10-13 11:17:09
status_changed: 2016-10-07 09:36:39
type: workingPaper
metadata_visibility: show
creators_name: Bluhm, Richard
creators_name: Gassebner, Martin
creators_name: Langlotz, Sarah
creators_name: Schaudt, Paul
title: Fueling Conflict? (De)Escalation and Bilateral Aid
subjects: ddc-330
divisions: i-181000
keywords: conflict, foreign aid, political economy, dynamic ordered panel data
abstract: This paper studies the effects of bilateral foreign aid on conflict escalation and de-escalation. We make three major contributions. First, we combine data on civil wars with data on low level conflicts in a new ordinal measure capturing the two-sided and multifaceted nature of conflict. Second, we develop a novel empirical framework. We propose a dynamic ordered probit estimator that allows
for unobserved heterogeneity and corrects for endogeneity. Third, we identify the causal effect of foreign aid on conflict by predicting bilateral aid flows based on electoral outcomes of donor countries that are exogenous to recipients. We establish that the effect of foreign aid on the various transition probabilities is heterogeneous and can be substantial. Receiving bilateral aid raises the chances of escalating from small conflict to armed conflict, but we find no evidence that aid ignites conflict in truly peaceful countries.
date: 2016-10
id_scheme: DOI
id_number: 10.11588/heidok.00021941
schriftenreihe_cluster_id: sr-3
schriftenreihe_order: 0619
ppn_swb: 869875035
own_urn: urn:nbn:de:bsz:16-heidok-219416
language: eng
bibsort: BLUHMRICHAFUELINGCON201610
full_text_status: public
series: Discussion Paper Series, University of Heidelberg, Department of Economics
volume: 0619
place_of_pub: Heidelberg
pages: 42
citation:   Bluhm, Richard ; Gassebner, Martin ; Langlotz, Sarah ; Schaudt, Paul  (2016) Fueling Conflict? (De)Escalation and Bilateral Aid.  [Working paper]     
document_url: https://archiv.ub.uni-heidelberg.de/volltextserver/21941/1/Bluhm_Gassebner_Langlotz_Schaudt_2016_dp619.pdf