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Terrorism and economic policy responses in Tunisia

Author

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  • Khelifi, Insaf
  • Dissou, Yazid
  • Bouabid, Anis

Abstract

This paper uses a recursive dynamic general equilibrium model to study the impact of the 2015 terrorist attacks in Tunisia. It examines the government’s fiscal responses: increased security spending and the reduction of the tourism sector’s value-added tax (VAT) rate. It finds that these responses accounted for a significant share of the attacks’ total cost. The results also underscore the need for a comprehensive approach to addressing the economic consequences of terrorism. Increased security spending mitigates future risks but does not directly help the affected sector. Direct support to the sector by reducing VAT has an immediate and positive impact.

Suggested Citation

  • Khelifi, Insaf & Dissou, Yazid & Bouabid, Anis, 2023. "Terrorism and economic policy responses in Tunisia," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1281-1295.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:6:p:1281-1295
    DOI: 10.1016/j.jpolmod.2023.11.003
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    More about this item

    Keywords

    Terrorism; Economic impact; Dynamic general equilibrium models; Tunisia;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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