(iPoster) Inflating the Cost of War: Domestic Price Changes and Conflict Termination

• In Event: Poster Session: Conflict Processes 2

Abstract

How does inflation impact the likelihood of conflict termination? Wars are often understood as battles of attrition with respect to elements such as national resources or willingness to continue fighting, but one factor which has tended to be overlooked is a state’s domestic monetary environment. This research examines how inflation and the cost of borrowing impacts the likelihood of observing a termination in dyadic conflict, arguing that changes in price levels can impact this outcome in a number of ways. First, inflation can be a signal of state capacity. As a state find itself under increasing strain a decline in its ability to direct its domestic economic environment may provide information to adversaries about its ability to continue fighting. Second, increasing inflation may also make it difficult for states to finance their war efforts by suppressing economic activity which reduces funds available for taxation, or making it increasingly difficulty (or costly) to borrow on international markets. We therefore expect that increasing levels of inflation at the national level, and larger intra-dyadic inflation rate differentials at the international level, should boost the likelihood of conflict termination, and test this argument using country-level data for states in conflict over a nearly 60-year period.

Authors

• Dmitriy Nurullayev, University of Arizona

• Daniel C. Tirone, Louisiana State University