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Does economic growth cause terrorism in Pakistan?

Shahbaz Muhammad, Nasir Malik Muhammad and Shahbaz Shabbir ()
Authors registered in the RePEc Author Service: Muhammad Shahbaz

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the relationship between terrorism and economic growth for Pakistan by incorporating capital and trade openness. We used the data from 1971-2010 and have applied ARDL bounds testing approach to cointegration to examine the long run relationship between the variables. The VECM Granger causality approach is used to detect the direction of causality between terrorism and economic growth. Our empirical results confirm the existence of long run relationship between economic growth and terrorism. The Granger causality analysis indicates bidirectional causality between terrorism and capital, trade openness and capital, and terrorism and trade openness. However, unidirectional causality is found running from economic growth to terrorism.

Keywords: Terrorism; Economic Growth; Cointegration and Causality (search for similar items in EconPapers)
JEL-codes: B22 (search for similar items in EconPapers)
Date: 2011-11-20, Revised 2011-11-30
New Economics Papers: this item is included in nep-cwa and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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