Central banks and civil war termination
| Autor: | Ana Carolina Garriga |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
Inflation
History Polymers and Plastics Sociology and Political Science media_common.quotation_subject Financial market Financial system Maturity (finance) Industrial and Manufacturing Engineering Independence Interest rate Spanish Civil War Debt Political Science and International Relations Economics Business and International Management Safety Research International finance media_common |
| Zdroj: | Journal of Peace Research. 59:508-525 |
| ISSN: | 1460-3578 0022-3433 |
| DOI: | 10.1177/00223433211038194 |
| Popis: | The ability to finance conflict likely affects the odds of sustaining a war and succeeding in it. Recent literature explores rebel group funding, but far less is known about how states finance their own war efforts. This article posits that the design of central banks should affect civil war termination. In particular, it argues that central bank independence affects civil war termination through two channels. First, financial markets consider central bank independence as a good signal in terms of macroeconomic stability and debt repayment. In this way, independent central banks enhance the ability of the government to access credit to finance and end a civil war. Second, central bank independence is associated with lower inflation. Inflation control reduces one source of additional grievances that the civil war may impose on citizens. On a sample of civil wars between 1975 and 2009, central bank independence is associated with a substantial increase in the likelihood of war termination. When the form of termination is disaggregated, (higher) central bank independence is associated with a higher probability of government victory, relative to continued conflict and to other outcomes. Additional tests provide support for the argued mechanisms: during civil wars, countries with more independent central banks access international credit markets in better conditions – i.e. they pay lower interest rates, and receive longer grace and maturity periods on new debt. Furthermore, in countries experiencing civil wars, central bank independence is associated with lower inflation. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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