There’s a piece in Der Spiegel reporting that many in Iraq consider the “Kalashnikov Index,” a tongue-in-cheek name for average local arms prices, “the most reliable indicator of what the future may bring”:

On Thursday morning, only hours after US President George Bush once again promised America would help bring peace and stability to the war-torn nation, Baghdad’s weapons prices weren’t dropping. Glock-19 pistols were stable at $500 and the popular compact version of the AK-47 was still fetching $2,000.

I guess in the instance you’re justified in holding supply constant in the near term and inferring that people aren’t suddenly feeling safer. But in general, how are you supposed to know how to interpret those figures? After all, the price could drop sharply for at least two reasons: Maybe people are feeling more secure, and therefore buying fewer arms or selling off some of those they have. On the other hand, maybe it means a huge shipment of weapons has just entered the market from some exogenous source. Ditto for a rise in the price: It might mean people are arming up more, or that the authorities have done a good job confiscating black-market weapons. I’m not sure how you’d know just from the raw numbers whether to consider it a good sign or a bad sign.