Effects of Neighboring Nation Terrorism on Imports

Subhayu Bandyopadhyay, Chris Doucouliagos and Cong Pham

No 2019-017, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We present a monopolistic competition model to analyze the effects of own nation and neighboring nation terrorism on a nation’s imports. The theoretical analysis shows that own nation terrorism may leave relative price of imports unaffected, but neighboring nation terrorism must raise the relative price, reducing imports. We find that a 10% increase in terrorist attacks in a neighboring nation reduces a country’s imports from the rest of the world by approximately $320 million USD, on average. Mediation analysis shows that trading delays is a potential channel of transmission of trade costs of terrorism to a neighbor.

Keywords: Terrorism; Spillovers; Bilateral imports (search for similar items in EconPapers)
JEL-codes: D74 F14 H56 (search for similar items in EconPapers)
Pages: 42
Date: 2019-05-29, Revised 2020-02-03
New Economics Papers: this item is included in nep-int
Note: Publisher DOI: https://doi.org/10.1002/soej.12508
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Published in Southern Economic Journal

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Journal Article: Effects of neighboring nation terrorism on imports (2021)
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DOI: 10.20955/wp.2019.017

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