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Is hike in inflation responsible for rise in terrorism in Pakistan?

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  • Shahbaz, Muhammad
  • Shabbir, Shahbaz Muhammad

Abstract

This paper investigates the static and dynamic effect of inflation and economic growth on terrorism using annual frequency i.e. 1971-2010 in case of Pakistan. In doing so, ARDL bounds testing approach to cointegration has been applied while robustness of long run relationship is confirmed by using rolling window approach. The empirical evidence confirms cointegration between inflation, economic growth and terrorism in Pakistan. An increase in inflation raises terrorist attacks. Economic growth is also a major contributor to terrorism. Moreover, bidirectional causality is found between inflation and terrorism as investigated by VECM Granger-causality approach while variance decomposition also supports the findings by VECM analysis.

Suggested Citation

  • Shahbaz, Muhammad & Shabbir, Shahbaz Muhammad, 2011. "Is hike in inflation responsible for rise in terrorism in Pakistan?," MPRA Paper 31236, University Library of Munich, Germany, revised 29 May 2011.
    • Handle: RePEc:pra:mprapa:31236
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    Citations

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    Cited by:

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    2. Destek, Mehmet Akif & Manga, Müge & Cengiz, Orhan & Destek, Gamze, 2022. "Investigating the potential of renewable energy in establishing global peace: Fresh evidence from top energy consumer countries," Renewable Energy, Elsevier, vol. 197(C), pages 170-177.
    3. Muhammad, Shahbaz & Muhammad, Nasir Malik & Muhammad, Shahbaz Shabbir, 2011. "Does economic growth cause terrorism in Pakistan?," MPRA Paper 35101, University Library of Munich, Germany, revised 30 Nov 2011.
    4. Muhammad Tahir, 2020. "Terrorism and its Determinants: Panel Data Evidence from 94 Countries," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 15(1), pages 1-16, March.
    5. albagoury, samar, 2016. "الأسباب الإقتصادية لتنامي ظاهرة الإرهاب في إفريقيا جنوب الصحراء [Economic Causes of Terrorism in Africa South of the Sahara]," MPRA Paper 74740, University Library of Munich, Germany.
    6. Shuo She & Qiao Wang & Dana Weimann-Saks, 2020. "Correlation factors influencing terrorist attacks: political, social or economic? A study of terrorist events in 49 “Belt and Road” countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 54(1), pages 125-146, February.
    7. Raza, Syed Ali & Shah, Nida & Khan, Waqas Ahmed, 2017. "Do Workers’ Remittances Increase Terrorism? Evidence from South Asian Countries," MPRA Paper 86745, University Library of Munich, Germany, revised 2017.
    8. James A. Piazza, 2013. "The Cost of Living and Terror: Does Consumer Price Volatility Fuel Terrorism?," Southern Economic Journal, John Wiley & Sons, vol. 79(4), pages 812-831, April.

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    More about this item

    Keywords

    Inflation; Terrorism; Cointegration;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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