The econometrics of violence, terrorism and scenarios for peace in Colombia from 1950 to 2019

Abstract: This paper continues a research born in 1993 as a consequence of the concern regarding the increase in Colombian violence, and especially for its escalation during the 1990’s, its objective is to create an econometric model capable of forecasting the path of terrorist murder under different policy options and helping the country in the design of a state policy drawing the lineaments for reaching the pacification of the country. In the first part I use The Beveridge and Nelson decomposition of economic time series to estimate the cyclical component of murder which is used to construct a theoretically and statistically satisfying model to account for it from 1950 to 2004. The variables that together account for eighty three percent of the variation in cyclical terrorist murder are the years of Colombia’s La Violencia period when the peasant self-defense movements appeared, the years of the so-called National Front political collusion between the two main establishment parties, the real trade balance, the size of Colombia’s military forces as a proxy for all armed forces (military, para-military, guerrilla, and drug-related) in the country, the unemployment rate, the number of students matriculated in all modalities and people displaced in the country. The forecasts for cyclical terrorist murder for 2005-2007 show the big dilemma facing the Colombian authorities: the strong reduction of displaced people from 2003 to 2004 boost the cyclical terrorist murder in the countryside, erasing the initial results by president Uribe’s administration at controlling the intensity of the Colombian civil conflict. The second part presents a first approach at constructing a theoretical near-VAR system for cyclical terrorist murder and social and economic variables in Colombia. The third section presents forecasts 2004-2007 estimated by the single equation model and the near VAR-system. Both models show a jump in terrorist murder by 2004 and 2005 implying that any future policy at diminishing the conflict should control ...