Financial Uncertainty in Germany and its Impact on Western European Terrorism
AbstractThis paper analyses the link between the VDAX as a proxy for European financial uncertainty and the number of terror incidents in Western Europe. Considering data of the Global Terrorism Database, the number of terror incidents does – on average – not affect financial uncertainty. In contrast, based on a behavioral model of terrorism motivated by Schmid and de Graaf (1982), lagged financial uncertainty contains information for the risk of terror events. Estimation results of the negative binominal quasi maximum likelihood count data model confirm an inverse impact of lagged financial uncertainty on terrorism. Furthermore, empirical evidence leads to the conclusion of average lead time for terror incidents of 6 month. These results are potentially important for terror prevention.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0296.
Length: 16 pages
Date of creation: Dec 2011
Date of revision:
Find related papers by JEL classification:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
- Z10 - Other Special Topics - - Cultural Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
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