This paper uses an untapped source of satellite-recorded nightlights and gas flaring data to characterize the contraction of economic activity in Yemen throughout the ongoing conflict that erupted in 2015. Using estimated nightlights elasticities on a sample of 72 countries for real GDP and 28 countries for oil GDP over 6 years, I derive oil and non-oil GDP growth for Yemen. I show that real GDP contracted by a cumulative 24 percent over 2015-17 against 50 percent according to official figures. I also find that the impact of the conflict has been geographically uneven with economic activity contracting more in some governorates than in others.
change in nightlights intensity and real GDP growth. The authors combine nightlights-based predicted real GDP with national accounts data to compute an enhanced measure of true real GDP growth. Pinkovskiy et al. (2016) use nightlightsdata to assess the relative quality of GDP per capita and survey means and build a new measure of real GDP. The geographic granularity of nightlightsdata also allows to investigate income growth distribution at subnational levels. Dai et al. (2017) , Basihos (2016) , Bundervoet et al. (2015) and Bandhari et al. (2011) leverage
.4 Annual frequency data
Here, I recompute the main results using annual frequency data. This has two main advantages. First, annual aggregation is a useful check that very volatile monthly observations are not driving the results. Second, because nightlightsdata are available over the sample at only an annual frequency – monthly data start in April 2012 – the annual data have an additional control for local activity. 39 This is important for the results of Section 4.4 .
C.4.1 Dynamic equation estimates
Table 16 presents the headline results, which
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 $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.
Timely data availability is a long-standing challenge in policy-making and analysis for low-income developing countries. This paper explores the use of Google Trends’ data to narrow such information gaps and finds that online search frequencies about a country significantly correlate with macroeconomic variables (e.g., real GDP, inflation, capital flows), conditional on other covariates. The correlation with real GDP is stronger than that of nighttime lights, whereas the opposite is found for emerging market economies. The search frequencies also improve out-of-sample forecasting performance albeit slightly, demonstrating their potential to facilitate timely assessments of economic conditions in low-income developing countries.
International Monetary Fund. Middle East and Central Asia Dept.
This paper presents 2019 Article IV Consultation with Republic of Afghanistan and its Sixth Review Under the Extended Credit Facility Arrangement. Despite difficult circumstances, the Afghan authorities have continued to demonstrate strong commitment to the economic program supported by the Extended Credit Facility arrangement. Given the uncertain outlook dominated by downside risks, policies should focus on maintaining macroeconomic and financial stability and putting the conditions in place for stronger and more inclusive growth, led by the private sector. The authorities have made progress with their self-reliance agenda, yet strong financial support from donors is needed to help Afghanistan stay on the path to greater prosperity. Fiscal policy should continue to target a broadly balanced budget, supported by fair and sustainable domestic revenue mobilization and strong financial support by donors. Resources should shift toward pro-growth and pro-poor outlays and create fiscal space to meet the country’s considerable development needs.