Events at CERGE-EI

Prof. Mathias Thoenig

University of Lausanne, Switzerland

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Abstract: This paper presents a framework for estimating and simulating a quantitative spatial model of trade and violence. In this new theoretical and empirical setup, suited for disciplining sub-national and international data, we first model the general equilibrium interactions between the economic and fighting margins in a micro-founded setup. We then show how the structural parameters can be recovered from the data in a simple and transparent way. A central element of the procedure consists in estimating a structural gravity equation of violence. Looking at sub-Saharan Africa over the period 1997 to 2022, we test the key predictions of the model and uncover new facts related to spatial frictions and conflicts. Finally, the model is used to quantify counterfactual policy interventions that aim at promoting development in weakly institutionalized contexts where insecurity is pervasive.