On Terrorism and Electoral Outcomes: Theory and Evidence from the Israeli-Palestinian Conflict

This paper investigates the interaction between terrorist attacks and electoral outcomes in Israel. We analyze a dynamic model of reputation that captures the salient characteristics of this conflict. The equilibrium of the theoretical model generates two precise empirical predictions on the interaction between terrorism and electoral outcomes. First, we expect that the relative support for the rightist party increases after periods with high levels of terrorism and decreases after relatively calm periods. Second, the expected level of terrorism is higher during the leftist party's tenure in office compared to the one expected during the rightist party s term in office. We test the hypotheses above using a newly culled data set on terrorist attacks in Israel and the occupied territories between 1990 and 2003. The first hypothesis is strongly supported by the available data obtained from public opinion polls on the Israeli electorate s intent of voting. We use event study methods and likelihood ratio tests to evaluate the second hypothesis, as electoral outcomes are endogenous to the level of terrorist attacks. The results support our theoretical prediction for three of the four Israeli governments in the studied time period. Accordingly, we observe an increase in terrorist attacks during leftist governments and a decrease in terrorist attacks during rightist governments.