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The Impact of Terrorism on the Defense Industry

38 Pages Posted: 26 May 2005  

Claude Berrebi

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)

Date Written: July 1, 2008

Abstract

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.

Keywords: Terror; Defense Sector; Financial Markets

JEL Classification: D74, G14, K42, L64, P16

Suggested Citation

Berrebi, Claude and Klor, Esteban F., The Impact of Terrorism on the Defense Industry (July 1, 2008). RAND Working Paper Series WR- 597. Available at SSRN: https://ssrn.com/abstract=729006 or http://dx.doi.org/10.2139/ssrn.729006

Claude Berrebi

RAND Corporation ( email )

Santa Monica, CA
310-393-0411 (Phone)

HOME PAGE: http://www.rand.org/about/people/b/berrebi_claude.html

Hebrew University - The Federmann School of Public Policy and Government

Hebrew University
Mount Scopus
Jerusalem, 91905
Israel

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States

HOME PAGE: http://www.econ.ucla.edu/people/Faculty/Berrebi.html

Princeton University - Department of Economics ( email )

Industrial Relations Section
Princeton, NJ 08544
United States
609-258-4777 (Phone)
609-258-2907 (Fax)

HOME PAGE: http://www.princeton.edu/~cberrebi

RAND Corporation - Labor and Population Studies ( email )

1776 Main Street
Santa Monica, CA
United States
310-393-0411 (Phone)

Esteban F. Klor (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3143 (Phone)
+972 2 581 6071 (Fax)

HOME PAGE: http://economics.huji.ac.il/facultye/klor/klor.htm

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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