In the last 15 years or so, ETA activity has substantially decreased, but also changed.Whilst the type of killings has become more specialised (politicians, reporters, etc.), a new phenomenon based on urban guerrilla tactics, and called in Basque “kale borroka” (street fighting), has emerged, creating an atmosphere of violence in the streets. The contribution of this paper is threefold. First, we create a daily measure of the level of violence in the area. Second, we examine if police action and the repressive policy measures adopted by government have been effective in reducing the intensity of violence. Third, we investigate whether the level of violence has had an effect on the stock market index in the Basque Country. The results, based on daily data from July 1st, 2001 to November 15th, 2005 suggest that the only effective measure to reduce violence was the banning of Herri Batasuna (HB), the radical party close to ETA supporters. Moreover, there was a decrease in the stock market index as a consequence of the violence in the area.
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Paper provided by Economics and Finance Section, School of Social Sciences, Brunel University in its series Economics and Finance Discussion Papers with number
06-03.
Length: 28 pages Date of creation: Feb 2006 Date of revision: Handle: RePEc:bru:bruedp:06-03
Contact details of provider: Postal: Brunel University, Uxbridge, Middlesex UB8 3PH, UK
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