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Terrorized economies

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  • Nicole Crain

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  • W. Crain

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Abstract

In this paper we estimate the macroeconomic consequences of terrorism using panel data for 147 countries for the period 1968–2002. The results reveal that the potential gains to a country from reducing terrorism are quite large, although the specific estimates depend on a country's population, base level of output, and investment. We present estimates of the impact of terrorism on GDP, GDP growth, investment, consumer spending, and tourism. These estimates of the marginal impact of terrorism provide a threshold against which a country's expenditures on anti-terrorism can be weighed. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Nicole Crain & W. Crain, 2006. "Terrorized economies," Public Choice, Springer, vol. 128(1), pages 317-349, July.
  • Handle: RePEc:kap:pubcho:v:128:y:2006:i:1:p:317-349
    DOI: 10.1007/s11127-006-9056-6
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    References listed on IDEAS

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    1. Eckstein, Zvi & Tsiddon, Daniel, 2004. "Macroeconomic consequences of terror: theory and the case of Israel," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 971-1002, July.
    2. Brown, Jeffrey R. & Cummins, J. David & Lewis, Christopher M. & Wei, Ran, 2004. "An empirical analysis of the economic impact of federal terrorism reinsurance," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 861-898, July.
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    9. Fielding, David, 2003. "Counting the Cost of the Intifada: Consumption, Saving and Political Instability in Israel," Public Choice, Springer, vol. 116(3-4), pages 297-312, September.
    10. Alan B. Krueger & Jitka Maleckova, 2003. "Education, Poverty and Terrorism: Is There a Causal Connection?," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 119-144, Fall.
    11. repec:cup:apsrev:v:77:y:1983:i:01:p:36-54_24 is not listed on IDEAS
    12. Rossi-Hansberg, Esteban, 2004. "Cities under stress," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 903-927, July.
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    Citations

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    Cited by:

    1. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.
    2. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2010. "The Economics of Terrorism and Counter-Terrorism: A Survey (Part I)," Discussion Papers of DIW Berlin 1049, DIW Berlin, German Institute for Economic Research.
    3. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2015. "The Economics Of Counterterrorism: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 131-157, February.
    4. repec:kap:pubcho:v:173:y:2017:i:3:d:10.1007_s11127-017-0477-1 is not listed on IDEAS
    5. Freytag, Andreas & Krüger, Jens J. & Meierrieks, Daniel & Schneider, Friedrich, 2011. "The origins of terrorism: Cross-country estimates of socio-economic determinants of terrorism," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 5-16.
    6. Kis-Katos, Krisztina & Liebert, Helge & Schulze, Günther G., 2014. "On the heterogeneity of terror," European Economic Review, Elsevier, vol. 68(C), pages 116-136.
    7. Krieger, Tim & Meierreiks, Daniel, 2015. "Does income inequality lead to terrorism? Evidence from the post-9/11 era," Discussion Paper Series 2015-04, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    8. Chaudhry, Naukhaiz & Roubaud, David & Akhter, Waheed & Shahbaz, Muhammad, 2018. "Impact of terrorism on stock markets: empirical evidence from the SAARC region," MPRA Paper 84783, University Library of Munich, Germany, revised 19 Feb 2018.
    9. Jean-Paul Azam & Véronique Thelen, 2008. "The roles of foreign aid and education in the war on terror," Public Choice, Springer, vol. 135(3), pages 375-397, June.
    10. Tim Krieger & Daniel Meierrieks, 2016. "Does Income Inequality Lead to Terrorism?," CESifo Working Paper Series 5821, CESifo Group Munich.
    11. Brück, Tilman & Llussá, Fernanda & Tavares, José A., 2011. "Entrepreneurship: The role of extreme events," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 78-88.
    12. Gustavo Canavire-Bacarreza & Alejandra Montoya-Agudelo & Felipe Bedoya-Maya, 2017. "An Uphill Battle: The Relationship Between Geography and Terrorism," DOCUMENTOS DE TRABAJO CIEF 015759, UNIVERSIDAD EAFIT.
    13. Kollias, Christos & Manou, Efthalia & Papadamou, Stephanos & Stagiannis, Apostolos, 2011. "Stock markets and terrorist attacks: Comparative evidence from a large and a small capitalization market," European Journal of Political Economy, Elsevier, vol. 27(S1), pages 64-77.
    14. Tim Krieger & Daniel Meierrieks, 2011. "What causes terrorism?," Public Choice, Springer, vol. 147(1), pages 3-27, April.
    15. Tim Krieger & Daniel Meierrieks, 2009. "Armut, Ungleichheit, wirtschaftliche Schwäche?: Empirische Evidenz und methodische Herausforderungen zum Zusammenhang von Ökonomie und Terrorismus," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(4), pages 29-40.
    16. 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.
    17. Peter Kurrild-Klitgaard & Mogens Justesen & Robert Klemmensen, 2006. "The political economy of freedom, democracy and transnational terrorism," Public Choice, Springer, vol. 128(1), pages 289-315, July.
    18. Kollias, Christos & Kyrtsou, Catherine & Papadamou, Stephanos, 2013. "The effects of terrorism and war on the oil price–stock index relationship," Energy Economics, Elsevier, vol. 40(C), pages 743-752.
    19. Sarah Brockhoff & Tim Krieger & Daniel Meierrieks, 2010. "Ties That Do Not Bind (Directly): The Education-Terrorism Nexus Revisited," Working Papers CIE 26, Paderborn University, CIE Center for International Economics.
    20. Dorsett, Richard, 2013. "The effect of the Troubles on GDP in Northern Ireland," European Journal of Political Economy, Elsevier, vol. 29(C), pages 119-133.
    21. Jonathan Benchimol & Makram El-Shagi, 2017. "Forecast Performance in Times of Terrorism," CFDS Discussion Paper Series 2017/1, Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China.

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