Title

A note on the macroeconomic consequences of ethnic/racial tension

Source of Publication

Economics Letters

Abstract

© 2017 The Authors While many studies stressed the importance of ethnic fractionalization on long-term economic growth, neither ethnic fractionalization always leads to ethnic conflict nor the intensity of conflict is constant over time. To address this potential bias, we construct an ethnic/racial tension index by using the number of US news articles that contain certain keywords. Utilizing this index we test the predictions of a simple theoretical model in a Markov Switching framework which allows to identify the impact of ethnic/racial tension in different states of the economy. Consistent with our theoretical predictions, results show that the magnitude of the impact of ethnic/racial tension is larger during low-growth periods.

Document Type

Article

First Page

100

Last Page

103

Publication Date

6-1-2017

DOI

10.1016/j.econlet.2017.02.015

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