The Impact of Terrorism on the Defense Industry
RAND Corporation; Hebrew University - The Federmann School of Public Policy and Government; University of California, Los Angeles (UCLA) - Department of Economics; Princeton University - Department of Economics; RAND Corporation - Labor and Population Studies
Esteban F. Klor
Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)
July 1, 2008
RAND Working Paper Series WR- 597
This paper analyzes the impact of terrorism on Israeli companies related to the defense, security or anti-terrorism industries, relative to its impact on the rest of the companies. The authors match every Israeli company to the American company with the closest expected return among all the companies that belong to the same industry and trade in the same market in order to isolate the effect of terrorism from other common industry shocks. The findings show that whereas terrorism had a significant negative impact of 5% on non defense-related companies, it had a significantly positive overall effect of 7% on defense-related companies.
Number of Pages in PDF File: 38
Keywords: Terror; Defense Sector; Financial Markets
JEL Classification: D74, G14, K42, L64, P16
Date posted: May 26, 2005
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