The Effect of Terrorist Incidents on Capital Flows
AbstractThe current literature shows a significant negative impact of terrorism on countries' economies. We explore this relationship in more detail. Using an unbalanced panel of over 160 countries for up to 25 years and the Global Terrorism Database (GTD) we show a decrease in FDI as a consequence of terrorism. We also find evidence that FDI flows are more sensitive to terrorism than either portfolio investments or external debt flows. Finally, we test the hypothesis that terrorism has negative spill-over effects on FDI flows into neighboring countries and find evidence that cultural but not geographical closeness matters.
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Bibliographic InfoPaper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp480.
Date of creation: Jan 2013
Date of revision:
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capital flow; terrorism; FDI; spill-over effect;
Other versions of this item:
- Randall Filer & Dragana Stanišic, 2012. "The Effect of Terrorist Incidents on Capital Flows," CESifo Working Paper Series 3998, CESifo Group Munich.
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-19 (All new papers)
- NEP-GEO-2013-05-19 (Economic Geography)
- NEP-IFN-2013-05-19 (International Finance)
- NEP-OPM-2013-05-19 (Open Economy Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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