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Assignment Questions

War  and  Economic  Development

War  and  Economic  Development

Prior  research  on  the  effect  of  war  on  economic  development  has  been  inconclusive.   While  war  is  destructive  of  human  and  physical  capital,  waging  war  may  increase   employment  and  production  and,  so,  boost  GDP.  You  may  recognize  this  as  the  “war   is  good  for  the  economy”  argument.     To  investigate  the  actual  impact  of  war  on  economic  development,  I  assembled  three   massive  data  sets:     • GDP  per  capita  from  the  Maddison  Project;   • The  Index  of  Economic  Freedom  from  the  Cato  Institute,  and   • A  measure  of  war  that  includes  the  magnitude  of  war  from  the  Center  for   Systematic  Peace.     From  the  latter  source,  I  also  obtained  data  on  assassinations,  coups  and  other   violent  changes  in  government,  and  attempts  at  the  same.  These  data  are  to  be   found  in  the  file  EC516Assign3Data.     Your  assignment  is  to  regress  the  natural  logarithm  of  GDP  per  capita  on  the   following  set  of  variables  including  war  (specifically,  war,  the  lagged  value  of  war,   coups,  the  lagged  value  of  coups,  the  lagged  value  of  the  index  of  economic  freedom,   the  major  regions  of  the  world  [with  Europe  and  its  Offshoots  being  the  excluded   group]  and  the  lagged  value  of  the  natural  logarithm  of  GDP).  This  assignment   demonstrates  the  ability  of  regression  to  simultaneously  take  many  factors  into   account.     You  are  to  calculate  your  regression  for  a  particular  year,  for  example,  2015  (which   can  be  found  in  Grade),  interpret  your  results  with  an  emphasis  on  the  impact  of   war  but  also  considering  the  other  elements  of  the  analysis,  and  report  your

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