The Impact of Terrorism Across Industries: An Empirical Study

40 Pages Posted: 26 Jan 2006

See all articles by Claude Berrebi

Claude Berrebi

Hebrew University of Jerusalem - School of Public Policy; Hebrew University - School of Public Policy ; Princeton University; UCLA; RAND Corporation; Taub Center

Esteban F. Klor

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: November 2005

Abstract

This paper uses scoring matching techniques and event study analysis to elucidate the impact of terrorism across different economic sectors. Using the Israeli-Palestinian conflict as a case study, we differentiate between Israeli companies that belong to the defense, security or anti-terrorism related industries and other companies. The findings show that whereas terrorism has a significant negative impact on non defense-related companies, the overall effect of terrorism on defense and security-related companies is significantly positive. Similarly, using panel data on countries' defense expenditures and imports from Israel, we find that terror fatalities in Israel have a positive effect on Israeli exports of defense products. These results suggest that the expectation of future high levels of terrorism has important implications for resource allocation across industries.

Keywords: Terrorism, stocks returns, defense sector

JEL Classification: D74, G14, L64, P16

Suggested Citation

Berrebi, Claude and Klor, Esteban F., The Impact of Terrorism Across Industries: An Empirical Study (November 2005). CEPR Discussion Paper No. 5360, Available at SSRN: https://ssrn.com/abstract=878544

Claude Berrebi (Contact Author)

Hebrew University of Jerusalem - School of Public Policy ( email )

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Israel
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HOME PAGE: http://https://en.public-policy.huji.ac.il/people/claude-berrebi

Hebrew University - School of Public Policy ( email )

Jerusalem, 91905
Israel
+97225880151 (Phone)

HOME PAGE: http://https://en.public-policy.huji.ac.il/people/claude-berrebi

Princeton University ( email )

Woodrow Wilson School
Public and International Affairs
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HOME PAGE: http://wws.princeton.edu/sites/default/files/person/cvfiles/CV-20190101-HU-Princeton.pdf

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HOME PAGE: http://https://www.rand.org/pubs/authors/b/berrebi_claude.html

Taub Center ( email )

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HOME PAGE: http://dev.taubcenter.org.il/claude-berrebi/

Esteban F. Klor

Hebrew University of Jerusalem - Department of Economics ( email )

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

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

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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