Laura Mayoral

What explains the origins and survival of the first states around 5000 years ago? In this research, we focus on the role of weather-related productivity shocks for early state development in ancient Egypt. We present a framework of extractive state consolidation predicting that political stability should be high whenever environmental circumscription is high, i.e., whenever there is a large gap between the productivity of the area under state control (core) and that of the surrounding areas (hinterland). In such periods, the elite can impose high levels of taxation that the population will be forced to accept as exit to the hinterland is not a feasible option. In order to test this hypothesis, we develop novel proxies for both the historical productivity of the Nile banks and of the Egyptian hinterland on the basis of high-resolution paleoclimate archives. Our empirical analysis then investigates the relationship between these proxies for environmental circumscription and political outcomes such as ruler and dynastic tenure durations, the area under state control and pyramid construction during 2685–1140 BCE. Our results show that while extreme Nile floods are associated with a greater degree of political instability, periods with a greater rainfall in the hinterland (i.e., a lower effective environmental circumscription) causes a decline in state capacity and a delayed increase in political instability.

This article employs a Bayesian methodology to measure the uncertainty involved in the long-run holding of the purchasing power parity (PPP) and in the half-life (HL) of deviations from it. Our Bayesian approach combines estimates obtained from ARMA, ARFIMA, and ARIMA specifications so that it is able to take into account model uncertainty. Exact posterior distributions corresponding to all the features of interest (fractional orders of integration, impulse responses, HLs, etc.) are derived. Our results suggest that model uncertainty is high, which implies that uncertainty estimates can be severely biased downwards when the former is not explicitly considered. In spite of that, support for the long-run holding of the PPP is substantial in most countries. However, the speed at which this happens seems to be much slower than what has been suggested, as shown by the fact that the probability of the HL lying in the three- to five-year interval is very small.

Estimates of shock persistence based on disaggregate or on aggregate data are frequently very different. This article takes a step toward reconciling this apparent disconnect between micro‐ and macro‐based estimates of shock response. It is shown that, although the average of the individual impulse response functions (IRFs) is identical to the aggregate IRF, averages of other popular persistence measures, such as the sum of the autoregressive coefficients among others, tend to be larger the higher the aggregation level. The theoretical results are illustrated with two applications that use U.S. and European inflation data.

We examine empirically the impact of ethnic divisions on conflict, by using a specification based on Esteban and Ray (2011). That theory links conflict intensity to three indices of ethnic distribution: polarization, fractionalization, and the Gini-Greenberg index. The empirical analysis verifies that these distributional measures are significant correlates of conflict. These effects persist as we introduce country-specific measures of group cohesion and of the importance of public goods, and combine them with the distributional measures exactly as described by the theory. (JEL D63, D74, J15, O15, O17)

Over the second half of the 20th century, conflicts within national boundaries became increasingly dominant. One-third of all countries experienced civil conflict. Many (if not most) such conflicts involved violence along ethnic lines. On the basis of recent theoretical and empirical research, we provide evidence that preexisting ethnic divisions do influence social conflict. Our analysis also points to particular channels of influence. Specifically, we show that two different measures of ethnic division—polarization and fractionalization—jointly influence conflict, the former more so when the winners enjoy a “public” prize (such as political power or religious hegemony), the latter more so when the prize is “private” (such as looted resources, government subsidies, or infrastructures). The available data appear to strongly support existing theories of intergroup conflict. Our argument also provides indirect evidence that ethnic conflicts are likely to be instrumental, rather than driven by primordial hatreds.