The Economics of State Fragmentation: Assessing the Economic Impact of Secession - Addendum

Abstract

Reynaerts and Vanschoonbeek (2016) propose a semi-parametric procedure to estimate the economic impact of secession, finding empirical evidence that declaring independence significantly lowered per capita GDP in newly formed states. To demonstrate that these findings appear to hold irrespective of the estimation procedure employed, this addendum formulates a parametric approach to estimate the independence dividend. Our preferred parametric specifications comprise a dynamic, quasi-myopic model of per capita GDP dynamics that controls for country and year fixed effects, the rich dynamics of GDP, finite anticipation effects and a vector of alternative growth determinants. The results indicate that declaring independence reduces per capita GDP by around 15-20% in the long run. These results are qualitatively confirmed when we use non-regional secession waves to instrument for local incentives to secede.

The economics of state fragmentation: Assessing the economic impact of secession

“…Finally, to demonstrate that these general findings appear to hold irrespective of the estimation procedure employed, Reynaerts and Vanschoonbeek (2016) also formulate a parametric approach to estimate the independence payoff, obtaining similar results.…”

Do trade agreements contribute to the decline in labor share? Evidence from Latin American countries

“…A first set of papers applies difference-in-differences (Wassmann 2015;Ferrari and Picco 2016;Campos, Coricelli, and Moretti 2014). Another paper, Reynaerts and Vanschoonbeek (2016), implements a DDD estimate similar to the one described here. In this paper we extend this idea to the event study equations.…”

“…Other examples that analyze TA are Billmeier and Nannicini (2013), Hannan (2016), Adarov (2018), Kassa and Coulibaly (2019). Examples that use these methods to analyze other type of agreements are Campos, Coricelli, and Moretti (2014), Wassmann (2015), Ferrari and Picco (2016), Reynaerts and Vanschoonbeek (2016), and Saia (2017).…”