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Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum

Subhayu Bandyopadhyay (), Todd Sandler () and Javed Younas ()

No 2016-2, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We present a standard trade model and show that terrorism can be trade inducing, starting from autarky. In addition, terrorism can be shown to be welfare augmenting for a group of nations. Finally, we present some qualitative conditions that identify when a nation’s trade volume may rise (or fall) in response to a greater incidence of terrorism. Our trade and welfare results point to potential difficulties in international coordination of counterterrorism policy because of terrorism’s differential impact across nations.

Keywords: Terrorism; Trade; Welfare (search for similar items in EconPapers)
JEL-codes: F11 F52 H56 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2016-03-01
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2016-002

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DOI: 10.20955/wp.2016.002

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