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Does economic growth cause terrorism in Pakistan?

Author

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  • Muhammad, Shahbaz
  • Muhammad, Nasir Malik
  • Muhammad, Shahbaz Shabbir

Abstract

This paper analyzes the relationship between terrorism and economic growth for Pakistan by incorporating capital and trade openness. We used the data from 1971-2010 and have applied ARDL bounds testing approach to cointegration to examine the long run relationship between the variables. The VECM Granger causality approach is used to detect the direction of causality between terrorism and economic growth. Our empirical results confirm the existence of long run relationship between economic growth and terrorism. The Granger causality analysis indicates bidirectional causality between terrorism and capital, trade openness and capital, and terrorism and trade openness. However, unidirectional causality is found running from economic growth to terrorism.

Suggested Citation

  • 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.
  • Handle: RePEc:pra:mprapa:35101
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    More about this item

    Keywords

    Terrorism; Economic Growth; Cointegration and Causality;

    JEL classification:

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

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