The Impact of Terrorism Across Industries: An Empirical Study

Esteban Klor () and Claude Berrebi ()

No 5360, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses scoring matching techniques and event study analysis to elucidate the impact of terrorism across different economic sectors. Using the Israeli-Palestinian conflict as a case study, we differentiate between Israeli companies that belong to the defence, security or anti-terrorism related industries and other companies. The findings show that whereas terrorism has a significant negative impact on non defence-related companies, the overall effect of terrorism on defence and security-related companies is significantly positive. Similarly, using panel data on countries' defence expenditures and imports from Israel, we find that terror fatalities in Israel have a positive effect on Israeli exports of defence products. These results suggest that the expectation of future high levels of terrorism has important implications for resource allocation across industries.

Keywords: Terrorism; Stocks returns; Defense sector (search for similar items in EconPapers)
JEL-codes: D74 G14 L64 P16 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-fin
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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