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Terrorism, Trade, and Welfare

Author

Listed:
  • Subhayu Bandyopadhyay
  • Todd Sandler
  • Javed Younas

Abstract

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.

Suggested Citation

  • Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2017. "Terrorism, Trade, and Welfare," Review, Federal Reserve Bank of St. Louis, vol. 99(3), pages 295-306.
    • Handle: RePEc:fip:fedlrv:00086
    DOI: 10.20955/r.2017.295-306
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    References listed on IDEAS

    as
    1. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2016. "Trade and Terrorism: A Disaggregated Approach," Working Papers 2016-1, Federal Reserve Bank of St. Louis.
    2. Peter Egger & Martin Gassebner, 2015. "International terrorism as a trade impediment?," Oxford Economic Papers, Oxford University Press, vol. 67(1), pages 42-62.
    3. Khusrav Gaibulloev & Javed Younas, 2016. "Conflicts and domestic bank lending," Public Choice, Springer, vol. 169(3), pages 315-331, December.
    4. S. Brock Blomberg & Gregory D. Hess, 2006. "How Much Does Violence Tax Trade?," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 599-612, November.
    5. Nitsch, Volker & Schumacher, Dieter, 2004. "Terrorism and international trade: an empirical investigation," European Journal of Political Economy, Elsevier, vol. 20(2), pages 423-433, June.
    6. Khusrav Gaibulloev & Todd Sandler, 2009. "The Impact Of Terrorism And Conflicts On Growth In Asia," Economics and Politics, Wiley Blackwell, vol. 21(3), pages 359-383, November.
    7. Keefer,Philip & Loayza,Norman (ed.), 2008. "Terrorism, Economic Development, and Political Openness," Cambridge Books, Cambridge University Press, number 9780521887588, September.
    8. Enders,Walter & Sandler,Todd, 2012. "The Political Economy of Terrorism," Cambridge Books, Cambridge University Press, number 9780521181006, September.
    9. Burcu Savun & Brian J. Phillips, 2009. "Democracy, Foreign Policy, and Terrorism," Journal of Conflict Resolution, Peace Science Society (International), vol. 53(6), pages 878-904, December.
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    Cited by:

    1. Stacy Julius & Nnanna P. Azu & Maimuna Y. Muhammad, 2019. "Assessing the Impact of Terrorism in Trade Development in the SADC Region: A Gravity Model Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(10), pages 1147-1159, October.

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    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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