Economic War and Democratic Peace

Research has shown that democracies rarely, if ever, engage each other in war and are less likely to have militarized disputes than when interacting with authoritarian regimes. Economic sanctions are an alternative to militarized conflict viewed by the masses as more acceptable. The conflict-inhibiting effects of democratic norms and institutions are thus weakened with respect to the use of sanctions. This paper examines whether a country\u27s decision to initiate sanctions is influenced by its regime type as well as that of the potential target. The results for the period 1950 to 1990 indicate that the more democratic a country is, the more likely it is to initiate sanctions. Democracies, however, are less likely to target other democratic regimes relative to nondemocratic regimes. With respect to sanctions use, pairs of democracies are not peaceful

Mission Accomplished: A Reply to Reuveny and Keshk

Reuveny and Keshk (“Reconsidering trade and conflict simultaneity: The risk of emphasizing technique over substance,” this issue, 2013) argue that the econometric techniques used by Goenner (Conflict Management and Peace Science 28(5): 459–477, 2011) to test and control for endogeneity when estimating the relationship between trade and conflict lack substance. Both sets of authors propose the use of instrumental variable methods, which are known by econometricians to be the natural remedy for estimation with potentially endogenous regressors. Where Goenner (2011) and Reuveny and Keshk (2013) agree is that theory should guide variable selection and the model’s specification. Yet they differ in that, while econometric tests cannot replace theory, one should not trust the appropriateness of the model’s specification based on theory alone – one should also verify. Otherwise, as Goenner (2011) notes, attempts to control for endogeneity may fail

Simultaneity between Trade and Conflict: Endogenous Instruments of Mass Destruction

The classical liberal belief is trade, which economically benefits countries, creates ties binding the interests of countries and reduces conflict. While the vast majority of the empirical literature supports this view, recent research questions these findings by also considering the reciprocal relationship between trade and conflict. If conflict also influences trade, then trade is an endogenous right hand side regressor and previous estimates which ignore this are inconsistent. This article determines when one uses appropriate instruments for the endogenous regressors that trade reduces conflict and conflict reduces trade. Failure to use such instruments results in inconsistent estimates and can lead to the spurious conclusion that trade increases conflict. The lesson is the use of inappropriate instruments can be worse than not using them at all

Incorporating Writing Into An Introductory Business And Economics Statistics Course: A Practical Approach

Writing across the curriculum (WAC) has become a guiding principle at many institutions of higher education.  Unfortunately for many students of economics and business the standard vehicles of WAC do not adequately prepare them for the type of writing appropriate for the audience they are expected to address upon graduation.  We describe a method of implementing writing into the introductory statistics courses that are required by many programs in economics and business.  This method addresses the shortcomings of the standard vehicles of WAC while at the same time providing instructors with a feasible solution to do so in light of the multiple constraints faced by many instructors of this type of course.  (JEL A22

A life-cycle approach to the intertemporal elasticity of substitution

We construct a three-period model spanning 30 years of an optimizing consumer's life. Exploiting the first-order conditions, we derive expressions for the intertemporal elasticity of substitution (IES) that allow for different utility specifications; the case of isoelastic utility is a special case. We fit US household data on income, consumption, and net worth to the IES expressions to obtain point estimates of the IES. We also construct 95 percent confidence intervals, based on 10,000 simulated observations. Our evidence suggests that the value of the IES is likely between 0.2 and 0.8.

Discrimination and Mortgage Lending in Boston: The Effects of Model Uncertainty

Mortgage lending, Discrimination, Variable selection, Bayesian model averaging,