IMF Working Papers

The Urgency of Conflict Prevention – A Macroeconomic Perspective

By Hannes Mueller, Christopher Rauh, Benjamin R Seimon, Raphael A Espinoza

December 20, 2024

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Hannes Mueller, Christopher Rauh, Benjamin R Seimon, and Raphael A Espinoza. "The Urgency of Conflict Prevention – A Macroeconomic Perspective", IMF Working Papers 2024, 256 (2024), accessed March 16, 2025, https://doi.org/10.5089/9798400293832.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Can macroeconomic policy effectively help prevent armed conflicts? This paper contends that two key criteria need to be satisfied: the long-term benefits of prevention policies must exceed the costs associated with uncertain forecasts, and the policies themselves must be directly able to contribute to conflict prevention. This paper proposes policy simulations, based on a novel method of Mueller et al (2024a) that integrates machine learning and dynamic optimization, to show that investing in prevention can generate huge long-run benefits. Returns to prevention policies in countries that have not suffered recently from violence range from $26 to $75 per $1 spent on prevention, and for countries with recent violence, the rate of return could be as high as $103 per $1 spent on prevention. Furthermore, an analysis of the available data and results in the literature suggest that sound macroeconomic policies and international support for these policies can play key roles in conflict prevention. Based on these findings, this paper proposes actionable recommendations, for both global and domestic policymakers as well as international financial institutions and multilateral organizations, to promote peace and stability through macroeconomic policy.

Subject: Expenditure, Fiscal policy, Fiscal stance

Keywords: Africa, Building state capacity, Caribbean, Conflict, Conflict prevention, Conflict stage country, Et al, Fiscal stance, Fragile state, Global, Machine learning, Policy recommendation, Policy simulation, Prevention, Prevention policy

Publication Details

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