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The economic impact of terrorism: A new model and its application to Pakistan

Mario Ruiz Estrada, Donghyun Park (), Jung Suk Kim and Alam Khan

Journal of Policy Modeling, 2015, vol. 37, issue 6, 1065-1080

Abstract: This paper introduces a new economic model to analyze the effects of a possible terrorist attack, namely the terrorist attack vulnerability evaluation model (TAVE-Model). The model analyzes three different phases of terrorism: (i) origins of a terrorist attack; (ii) terrorist attack itself; and (iii) post-attack effects. In addition, the TAVE-Model identifies economic desgrowth (−δ), intensity of terrorist activities (αi), terrorist attack losses (−π), economic wear (Π), level of terrorist attack tension (ζ), level of terrorist attacks monitoring (η), and total economic leaking (Ωt) under a terrorist attack. Finally, we apply the TAVE-Model to Pakistan, a country where terrorism poses a significant socio-economic risk. More specifically, we use the model to assess the relationship between terrorism and the economic performance of Pakistan.

Keywords: Terrorism; Economic modeling; Economic desgrowth; Policy modeling; Pakistan (search for similar items in EconPapers)
JEL-codes: R11 R12 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:eee:jpolmo:v:37:y:2015:i:6:p:1065-1080