Terrorism and economic policy responses in Tunisia

Insaf Khelifi, Yazid Dissou and Anis Bouabid

Journal of Policy Modeling, 2023, vol. 45, issue 6, 1281-1295

Abstract: This paper uses a recursive dynamic general equilibrium model to study the impact of the 2015 terrorist attacks in Tunisia. It examines the government’s fiscal responses: increased security spending and the reduction of the tourism sector’s value-added tax (VAT) rate. It finds that these responses accounted for a significant share of the attacks’ total cost. The results also underscore the need for a comprehensive approach to addressing the economic consequences of terrorism. Increased security spending mitigates future risks but does not directly help the affected sector. Direct support to the sector by reducing VAT has an immediate and positive impact.

Keywords: Terrorism; Economic impact; Dynamic general equilibrium models; Tunisia (search for similar items in EconPapers)
JEL-codes: C68 E21 E23 O11 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:45:y:2023:i:6:p:1281-1295

DOI: 10.1016/j.jpolmod.2023.11.003

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