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Non-Linear Effects Of Terrorism On Economic Growth In Pakistan: Accounting For Capital Per Worker And Structural Breaks

Author

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  • RONALD RAVINESH KUMAR

    (Informetrics Research Group, Ton Duc Thang University, Ho Chi Minh City, Vietnam2Faculty of Social Sciences and Humanities, Ton Duc Thang University, Ho Chi Minh City, Vietnam)

  • SYED JAWAD HUSSAIN SHAHZAD

    (Department of Management of Science and Technology Development, Ton Duc Thang University, Ho Chi Minh City, Vietnam4Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City, Vietnam)

  • PETER JOSEF STAUVERMANN

    (Department of Global Business and Economics, Changwon National University, Republic of Korea (South Korea))

  • NIKEEL KUMAR

    (School of Accounting and Finance, The University of the South Pacific, Fiji)

Abstract

In this study, we examine the asymmetric effects of terrorism and economic growth in Pakistan over the period 1970–2016, while considering the role of capital per worker and structural breaks. We use the non-linear ARDL approach to establish the long-run association and to estimate the short-run and long-run effects accordingly. The results indicate the presence of asymmetries in both long and short run. Moreover, 1% decrease in terrorism results in an increase of per capita income by 0.02% in the long run and 0.001% in the short run. Assuming symmetry, the long run capital share is 0.47. In asymmetric relation, a 1% increase in capital share increases output by 0.55%, whereas a 1% decrease in capital stock decreases output by 0.26%. The break effects show that the years 1993 and 2004 have negative effects on growth. The vector error correction model-based causality results indicate a unidirectional causality from terrorism to per capita income. Overall, the results highlight that terrorism is growth retarding.

Suggested Citation

  • Ronald Ravinesh Kumar & Syed Jawad Hussain Shahzad & Peter Josef Stauvermann & Nikeel Kumar, 2023. "Non-Linear Effects Of Terrorism On Economic Growth In Pakistan: Accounting For Capital Per Worker And Structural Breaks," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(02), pages 629-650.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:02:n:s0217590819500140
    DOI: 10.1142/S0217590819500140
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    Keywords

    Terrorism; economic growth; structural breaks; non-linear ARDL; causality; Pakistan;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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