Article

Conflict and Policy in General Equilibrium: Insights from a Standard Trade Model

Ernesto Dal Bó and Pedro Dal Bó

in The Oxford Handbook of the Economics of Peace and Conflict

Published in print April 2012 | ISBN: 9780195392777
Published online November 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780195392777.013.0025

Series: Oxford Handbooks

Conflict and Policy in General Equilibrium: Insights from a Standard Trade Model

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  • Econometric and Statistical Methods and Methodology: General
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This article examines general equilibrium effects of conflict using a standard trade model, but with a focus on the effects of domestic conflict. Conflict introduces distortions in an economy that are typically different than other distortions examined by economists. Tax or subsidy schemes on consumption and production, trade policies, and technology policies can then be optimal responses to the presence of conflict. The article shows how the different policy instruments can reduce conflict and how they rank relative to one another in terms of welfare.

Keywords: general equilibrium; domestic conflict; economic distortions; conflict reduction

Article.  8649 words. 

Subjects: Economics ; Econometric and Statistical Methods and Methodology: General ; Econometrics and Mathematical Economics

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