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Under attack: Terrorism and international trade in France, 2014–2016

Author

Listed:
  • Volker Nitsch
  • Isabelle Rabaud

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

Abstract

Terrorist events typically vary along many dimensions, making it difficult to identify their economic effects. This paper analyses the impact of terrorism on international trade by examining a series of three large-scale terrorist incidents in France over the period from January 2015 to July 2016. Using firm-level data at monthly frequency, we document an immediate and lasting decline in cross-border trade after a mass terrorist attack. According to our estimates, France's trade in goods, which accounts for about 70% of the country's trade in goods and services, is reduced by more than 6 billion euros in the first 6 months after an attack. The reduction in trade mainly takes place along the intensive margin, with particularly strong effects for partner countries with low border barriers to France, for firms with less frequent trade activities and for homogeneous products. A possible explanation for these patterns is an increase in trade costs due to stricter security measures.

Suggested Citation

  • Volker Nitsch & Isabelle Rabaud, 2022. "Under attack: Terrorism and international trade in France, 2014–2016," Post-Print hal-03810471, HAL.
    • Handle: RePEc:hal:journl:hal-03810471
    DOI: 10.1093/oep/gpab040
    as

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism

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