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Small investment and large returns: Terrorism, media and the economy

Rafi Melnick () and Rafi Eldor

European Economic Review, 2010, vol. 54, issue 8, 963-973

Abstract: The study investigates the role of the media in the impact of terrorism on the economy. A unique data set of the newspaper articles that reported terrorist attacks during 2002 is used to evaluate their impact on the Tel Aviv Stock Exchange. An econometric analysis is performed in order to understand how a newspaper decides to cover a terrorist attack, i.e. the number of articles, positioning of articles, whether to include photos and the size of headlines. It was found that media coverage is an important channel through which terrorism produces economic damage. The findings also showed that the economic damage caused by terrorist attacks increases monotonically with the amount of media coverage. It was also found that the economic impact of the media coverage diminishes over time.

Keywords: Terror; Terrorism; Media; Stock; markets; September; 11 (search for similar items in EconPapers)
Date: 2010
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