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Causal Linkages Between Domestic Terrorism and Economic Growth

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  • Thomas Gries
  • Tim Krieger
  • Daniel Meierrieks

Abstract

We use the Hsiao--Granger method to test for terrorism--growth causality for seven Western European countries. In bivariate settings, the impact of economic performance on domestic terrorism is very strong. In trivariate settings, the impact of performance on terrorism diminishes. In general, we find that economic performance leads terrorist violence in robust ways only for three out of seven countries. Terrorism is almost never found to causally influence growth in bivariate and trivariate specifications. Our findings indicate that the role of economic performance in determining terrorist violence appears to have been important for some countries, whereas all attacked economies have been successful in adjusting to the threat of terrorism.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:defpea:v:22:y:2011:i:5:p:493-508
    DOI: 10.1080/10242694.2010.532943
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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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