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Terrorism and international economic policy

Daniel Meierrieks and Friedrich Schneider ()

European Journal of Political Economy, 2021, vol. 69, issue C

Abstract: We add to the ongoing discussion regarding the policy consequences of terrorism by analyzing the effect of terrorism on international economic policy for a panel of 170 countries between 1970 and 2016. We find that countries resort to less liberal international economic policies when facing the threat of terrorism. This effect is especially relevant to smaller (less populated) countries. Our main finding is robust to an instrumental-variable approach. We argue that governments pursue less liberal international economic policies in response to terrorism to interrupt the organization and financing of terrorism, limit capital flight, stabilize public finances and signal political resolve.

Keywords: Terrorism; International economic policy; De jure economic openness; Globalization (search for similar items in EconPapers)
JEL-codes: D74 F13 F30 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.ejpoleco.2021.102011

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European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

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