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|Title:||A Note on the Macroeconomic Consequences of Ethnic/Racial Tension|
|Keywords:||Ethnic Tension;Markov Switching;News;Racial Tension|
|Abstract:||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.|
|Appears in Collections:||Dept of Economics and Finance Research Papers|
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