Terrorism, Trade, and Welfare
Subhayu Bandyopadhyay (),
Todd Sandler () and
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Javed Younas: American University of Sharjah
Review, 2017, vol. 99, issue 3, 295-306
For a standard competitive trade model, the authors show that the incidence of terrorism in different nations can affect the pattern of trade. Nations with a greater incidence of terrorism will export goods that are more immune to terrorism-related disruptions, while importing more terrorism-impacted goods. In addition, terrorism can be welfare augmenting for some nations because of terms-of-trade externalities. Finally, the authors present some qualitative conditions that identify when a nation’s trade volume may rise (or fall) in response to a greater incidence of terrorism. Given the differential impact across nations, these trade and welfare results point to potential difficulties in international coordination of counterterrorism policy.
JEL-codes: F11 F52 H56 (search for similar items in EconPapers)
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