Recessions and Civil Wars

Antonio Ciccone, one of the steering committee members of the ITFD program, has recently been doing work on the determinants of civil war. We know that recessions often coincide with the outbreak of civil conflict. What is not clear is the direction of causation - it could be that countries on the brink of a breakdown of civic order also end up with a drop in output. Antonio uses variations in the price of international commodities, such as coffee, to pin down causality. In work with Markus Brückner that uses data on Subsaharan Africa, they conclude that the link between recession and civil war is indeed causal. The effect is strong in autocratic regimes. Democracies, on the other hand, do not experience the same increase in civil conflict when recessions bite. You can see Antonio talk about his research here.

Banning the Speculators

As the price of food soars skyward, a lot of people wonder what can be done. Is the price rise in rise and wheat, causing serious unrest and hunger in many parts of the world, a result of speculation? A knock-on effect of higher oil prices? Should we think of rising commodity prices as a reaction to negative real interest rates, as Jim Hamilton over at Econbrowser argues?
Instead of doing the hard work of getting to the bottom of today's problems, I did what I like to think I do better, and looked at what happens when you ban the speculators. In 1896, largely as a result of lobbying by the agricultural elites, the German parliament banned all commodities futures trading on exchanges. The reason was the opposite of today's -- they blamed speculators for the downward pressure on prices. American grain was invading Europe, making life hard for the estate-owning Junker of Eastern Prussia. I did a full-page article for the Frankfurter Rundschau on this particular piece of backlash against the world market [in German]. The punchline? It doesn't work. You can ban the traders, but it's equivalent to shooting the messenger. Speculation may be to blame, but it's near-impossible to stop.

Applications for the first incoming class of the ITFD master

We just counted the total applications up to the end of April of this year - we got 65! About a year ago, Jaume, Fernando, Antonio and I were just kicking the idea of launching this program back and forth. Naturally, we wondered if people would really want to come. Weren't we too ambitious, thinking of a stand-alone program? Would the reputation of CREI and UPF pull enough people in to make the course viable? I don't think even one of us predicted we would get such an overwhelming response. And it's not just the number - it's the quality. We are going to have exceptionally well-qualified students from every corner of the globe. If my own graduate student days taught me something, it's that you learn an awful lot from your peers. It's in that sense that I think this is such great news. We have been quite selective and had to turn down a lot of applicants who unfortunately did not meet our standards; now we have to convince the ones that we admitted that joining ITFD in the fall is the right move.

Only in Spain?

Ah! To be a student in Spain... I receive some interesting excuses from students, but for today's class on the rise of the global economy from 15:00 to 17:00, I got one that I will always remember:

I am writing this email because I won’t be able to come to class on the first hour today. I am telling you this in case you wanted me to do the presentation today. I have a lunch that I cannot finish earlier.

Sorry for any inconvenience!

Now, I I do enjoy a good lunch. And I don't want to create the impression that this is normal. Yet I wonder if faculty at other universities/countries can top this... To be honest, the vast majority of students here are actually very hard working. They certainly know how to have a good time, but especially the first year of the M.Sc. in Economics can be gruelling. I am glad to add that the student in question, fortified by a good lunch, gave a great presentation.