Citation

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Title: The Impact of Terrorism Across Industries: An Empirical Study

Author(s): Claude Berrebi and Esteban F Klor

Publication Date: November 2005

Keyword(s): defense sector, stocks returns and terrorism

Programme Area(s): Industrial Organization and Public Economics

Abstract: This paper uses scoring matching techniques and event study analysis to elucidate the impact of terrorism across different economic sectors. Using the Israeli-Palestinian conflict as a case study, we differentiate between Israeli companies that belong to the defence, security or anti-terrorism related industries and other companies. The findings show that whereas terrorism has a significant negative impact on non defence-related companies, the overall effect of terrorism on defence and security-related companies is significantly positive. Similarly, using panel data on countries' defence expenditures and imports from Israel, we find that terror fatalities in Israel have a positive effect on Israeli exports of defence products. These results suggest that the expectation of future high levels of terrorism has important implications for resource allocation across industries.

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Bibliographic Reference

Berrebi, C and Klor, E. 2005. 'The Impact of Terrorism Across Industries: An Empirical Study'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5360