IDEAS home Printed from https://ideas.repec.org/p/fip/fedlwp/2016-002.html
   My bibliography  Save this paper

Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum

Author

Listed:
  • Subhayu Bandyopadhyay
  • Todd Sandler
  • Javed Younas

Abstract

We present a standard trade model and show that terrorism can be trade inducing, starting from autarky. In addition, terrorism can be shown to be welfare augmenting for a group of nations. Finally, we present some qualitative conditions that identify when a nation?s trade volume may rise (or fall) in response to a greater incidence of terrorism. Our trade and welfare results point to potential difficulties in international coordination of counterterrorism policy because of terrorism?s differential impact across nations.

Suggested Citation

  • Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2016. "Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum," Working Papers 2016-2, Federal Reserve Bank of St. Louis.
  • Handle: RePEc:fip:fedlwp:2016-002
    DOI: 10.20955/wp.2016.002
    as

    Download full text from publisher

    File URL: https://research.stlouisfed.org/wp/2016/2016-002.pdf
    File Function: Full text
    Download Restriction: no

    File URL: https://dx.doi.org/10.20955/wp.2016.002
    File Function: https://dx.doi.org/10.20955/wp.2016.002
    Download Restriction: no

    File URL: https://libkey.io/10.20955/wp.2016.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2011. "Foreign direct investment, aid, and terrorism: an analysis of developing countries," Working Papers 2011-004, 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. 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.
    4. 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.
    5. Abadie, Alberto & Gardeazabal, Javier, 2008. "Terrorism and the world economy," European Economic Review, Elsevier, vol. 52(1), pages 1-27, January.
    6. Subhayu Bandyopadhyay & Todd Sandler, 2014. "The effects of terrorism on trade: a factor supply approach," Review, Federal Reserve Bank of St. Louis, vol. 96(3), pages 229-241.
    7. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2014. "Foreign direct investment, aid, and terrorism," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 25-50, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alice Y. Ouyang & Ramkishen S. Rajan, 2017. "Impact of Terrorism on Cross-Border Mergers and Acquisitions (M&As): Prevalence, Frequency and Intensity," Open Economies Review, Springer, vol. 28(1), pages 79-106, February.
    2. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2018. "Trade and terrorism," Journal of Peace Research, Peace Research Institute Oslo, vol. 55(5), pages 656-670, September.
    3. Pham, Cong S. & Doucouliagos, Chris, 2017. "An Injury to One Is an Injury to All: Terrorism's Spillover Effects on Bilateral Trade," IZA Discussion Papers 10859, Institute of Labor Economics (IZA).
    4. Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, 2016. "Trade and Terrorism: A Disaggregated Approach," Working Papers 2016-1, Federal Reserve Bank of St. Louis.
    5. 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.
    6. Noman Ahmad & Alam Khan & Ihtisham ul Haq & Muhammad Hasnain Khalid & Seemab Ahmad, 2024. "The Impact of Terrorism on International Trade: A Panel Study for SAARC Countries," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(2), pages 671-676.
    7. Subhayu Bandyopadhyay & Devashish Mitra & Cong S. Pham, 2017. "The Effects of Terror on International Air Passenger Transport: An Empirical Investigation," Working Papers 2017-2, Federal Reserve Bank of St. Louis.
    8. De Sousa, José & Mirza, Daniel & Verdier, Thierry, 2018. "Terror networks and trade: Does the neighbor hurt?," European Economic Review, Elsevier, vol. 107(C), pages 27-56.
    9. Tung Nguyen & Dimitris Petmezas & Nikolaos Karampatsas, 2023. "Does Terrorism Affect Acquisitions?," Management Science, INFORMS, vol. 69(7), pages 4134-4168, July.
    10. Peter Egger & Martin Gassebner, 2015. "International terrorism as a trade impediment?," Oxford Economic Papers, Oxford University Press, vol. 67(1), pages 42-62.
    11. Isabelle RABAUD & Volker NITSCH, 2019. "Under Attack: Terrorism and International Trade in France, 2014-16," LEO Working Papers / DR LEO 2714, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    12. Zahoor Ul Haq & Zia Ullah & Javed Iqbal, 2018. "Terrorist Incidents and Trade," Global Social Sciences Review, Humanity Only, vol. 3(2), pages 55-70, June.
    13. Daniel Mirza & Thierry Verdier, 2014. "Are Lives a Substitute for Livelihoods? Terrorism, Security, and US Bilateral Imports," Journal of Conflict Resolution, Peace Science Society (International), vol. 58(6), pages 943-975, September.
    14. Asongu, Simplice, 2019. "Natural Resource Exports, Foreign Aid and Terrorism," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 9(1), pages 74-94.
    15. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    16. Chaudhry, Naukhaiz & Roubaud, David & Akhter, Waheed & Shahbaz, Muhammad, 2018. "Impact of terrorism on stock markets: Empirical evidence from the SAARC region," Finance Research Letters, Elsevier, vol. 26(C), pages 230-234.
    17. Younas, Javed, 2015. "Terrorism, openness and the Feldstein–Horioka paradox," European Journal of Political Economy, Elsevier, vol. 38(C), pages 1-11.
    18. Thomas Gries & Tim Krieger & Daniel Meierrieks, 2011. "Causal Linkages Between Domestic Terrorism and Economic Growth," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(5), pages 493-508, June.
    19. Amar Iqbal Anwar & Mazhar Mughal, 2013. "Foreign Financial Flows and Terrorism In Developing Countries," Working papers of CATT hal-01885149, HAL.
    20. Simplice Asongu & Ivo J. Leke, 2019. "Can Foreign Aid Dampen the Threat of Terrorism to International Trade? Evidence from 78 Developing Countries," Arthaniti: Journal of Economic Theory and Practice, , vol. 18(1), pages 32-55, June.

    More about this item

    Keywords

    Terrorism; Trade; Welfare;
    All these keywords.

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:2016-002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Oates (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.