International Terrorism, Political Instability and the Escalation Effect

43 Pages Posted: 30 Mar 2009

See all articles by Nauro F. Campos

Nauro F. Campos

Brunel University London - Economics and Finance; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute; IZA Institute of Labor Economics

Martin Gassebner

ETH Zurich - KOF Swiss Economic Institute; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

What are the main causes of international terrorism? The lessons from the surge of academic research that followed 9/11 remain elusive. The careful investigation of the relative roles of economic and political conditions did little to change the fact that existing econometric estimates diverge in size, sign and significance. In this paper we present a new rationale (the escalation effect) stressing domestic political instability as the main reason for international terrorism. Econometric evidence from a panel of more than 130 countries (yearly from 1968 to 2003) shows this to be a much more promising avenue for future research than the available alternatives.

Keywords: terrorism, international terrorism, political instability, escalation

JEL Classification: C25, D72, F59, H56, P48

Suggested Citation

Campos, Nauro F. and Gassebner, Martin, International Terrorism, Political Instability and the Escalation Effect. IZA Discussion Paper No. 4061. Available at SSRN: https://ssrn.com/abstract=1369807

Nauro F. Campos (Contact Author)

Brunel University London - Economics and Finance ( email )

Uxbridge UB8 3PH
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Martin Gassebner

ETH Zurich - KOF Swiss Economic Institute ( email )

Weinbergstrasse 35
Zurich, 8092
Switzerland

HOME PAGE: http://www.kof.ethz.ch/chair/

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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