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Assessing pacification policy in Iraq: Evidence from Iraqi financial markets

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  • Chaney, Eric

Abstract

At the end of January, 2006 the Iraqi government issued roughly $2.7 billion of debt in exchange for over $20 billion of Saddam-era commercial claims. This paper uses variation in the yield spread of this sovereign debt to evaluate pacification policy in Iraq. Structural change models are run in conjunction with conventional event study analysis. Results detail a mixed market reaction towards pacification policies implemented through August, 2006. While the market seems wary of coalition troop withdrawals, events denoted military and political breakthroughs by the United States seldom coincide with decreases in the yield spread. However, the market responds to news of negotiations with Iran positively. The analysis underscores the potential benefits of using market variation to inform policy in regions where data collection is difficult and policies are time sensitive. Journal of Comparative Economics 36 (1) (2008) 1-16.

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  • Chaney, Eric, 2008. "Assessing pacification policy in Iraq: Evidence from Iraqi financial markets," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 1-16, March.
    • Handle: RePEc:eee:jcecon:v:36:y:2008:i:1:p:1-16
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    1. Saeed Ghasseminejad & Mohammad R. Jahan-Parvar, 2020. "The Impact of Financial Sanctions: The Case of Iran 2011-2016," International Finance Discussion Papers 1281, Board of Governors of the Federal Reserve System (U.S.).
    2. Grigorian David & Kock Udo, 2014. "Inflation and Conflict in Iraq: The Economics of Shortages Revisited," Review of Middle East Economics and Finance, De Gruyter, vol. 10(2), pages 101-122, August.
    3. Heidi Kaila & Saurabh Singhal & Divya Tuteja, 2017. "Do fences make good neighbours?: Evidence from an insurgency in India," WIDER Working Paper Series wp-2017-158, World Institute for Development Economic Research (UNU-WIDER).
    4. Byung-Yeon Kim & Gerard Roland, 2011. "Are the Markets Afraid of Kim Jong-Il?," KIER Working Papers 789, Kyoto University, Institute of Economic Research.
    5. Pandey, Dharen Kumar & Lucey, Brian M. & Kumar, Satish, 2023. "Border disputes, conflicts, war, and financial markets research: A systematic review," Research in International Business and Finance, Elsevier, vol. 65(C).
    6. Eli Berman & Joseph Felter & Ethan Kapstein & Erin Troland, 2012. "Predation, Taxation, Investment, and Violence: Evidence from the Philippines," NBER Working Papers 18375, National Bureau of Economic Research, Inc.
    7. D Büttner & B. Hayo, 2012. "EMU-related news and financial markets in the Czech Republic, Hungary and Poland," Applied Economics, Taylor & Francis Journals, vol. 44(31), pages 4037-4053, November.
    8. Singhal, Saurabh & Nilakantan, Rahul, 2016. "The economic effects of a counterinsurgency policy in India: A synthetic control analysis," European Journal of Political Economy, Elsevier, vol. 45(C), pages 1-17.
    9. Heidi Kaila & Saurabh Singhal & Divya Tuteja, 2017. "Do fences make good neighbours? Evidence from an insurgency in India," WIDER Working Paper Series 158, World Institute for Development Economic Research (UNU-WIDER).

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