01960cas a2200241 a 4500 AALejournalIMF018749 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484374931 1018-5941 BD-DhAAL BD-DhAAL Barrett, Philip. The Fiscal Cost of Conflict : Evidence from Afghanistan 2005-2016 / Philip Barrett. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (79 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students I use a monthly panel of provincially-collected central government revenues and conflict fatalities to estimate government revenues lost due to conflict in Afghanistan since 2005. I identify causal effects by instrumenting for conflict using pre-sample ethno-linguistic share. Headline estimates are very large, implying total revenue losses since 2005 of USD 3bn, and future revenue gains from peace of about 6 percent of GDP per year. Reduced collection efficiency, rather than lower economic activity, appears to be the key channel. OLS estimates understate the causal effect by a factor of four. Comparing to estimates from Powell's (2017) generalized synthetic control method suggests that this bias results from omitted variables and measurement error in equal share. The findings underscore the considerable economic loss due to conflict, and the importance of careful identification in measuring this loss. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2018/204 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/204/001.2018.issue-204-en.xml IMF e-Library