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Reevaluating Terrorism and Economic Growth: Dynamic Panel Analysis and Cross-Sectional Dependence

Author

Listed:
  • Khusrav Gaibulloev
  • Todd Sandler
  • Donggyu Sul

Abstract

Contrary to the extant literature, this paper shows that the impact of terrorism on economic growth is insignificant in five regional samples. These surprising results follow when Nickell bias and cross-sectional dependence are taken into account. Previous studies have not properly adjusted for these biases. Our provocative findings are robust to alternative measures of terrorism (i.e., domestic, transnational, and total) and to alternative specifications of terrorism (e.g., level, first differenced, and attacks per capita). These findings are also robust to the inclusion of investment and population growth. Moreover, we find that the various forms of terrorism do not affect consumption, investment, and government expenditures. Our results have important policy implications.

Suggested Citation

  • Khusrav Gaibulloev & Todd Sandler & Donggyu Sul, "undated". "Reevaluating Terrorism and Economic Growth: Dynamic Panel Analysis and Cross-Sectional Dependence," Economics Working Papers 02-03/2013, School of Business Administration, American University of Sharjah.
    • Handle: RePEc:sha:ecowps:02-03/2013
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    References listed on IDEAS

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    Cited by:

    1. Mubashra, Sana & Shafi, Mariuam i, 2018. "The Impact of Counter-terrorism Effectiveness on Economic Growth of Pakistan: An Econometric Analysis," MPRA Paper 84847, University Library of Munich, Germany.

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    More about this item

    Keywords

    Economic growth; Terrorism; Dynamic panel; Nickell bias; Cross-sectional dependence;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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