Federal Reserve Bank of St. Louis
Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum
We present a standard trade model and show that terrorism can be trade inducing, starting from autarky. In addition, terrorism can be shown to be welfare augmenting for a group of nations. Finally, we present some qualitative conditions that identify when a nation’s trade volume may rise (or fall) in response to a greater incidence of terrorism. Our trade and welfare results point to potential difficulties in international coordination of counterterrorism policy because of terrorism’s differential impact across nations.
Cite this item
Subhayu Bandyopadhyay & Todd Sandler & Javed Younas, Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum, Federal Reserve Bank of St. Louis, Working Papers 2016-2, 01 Mar 2016.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
- H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
Keywords: Terrorism; Trade; Welfare
This item with handle RePEc:fip:fedlwp:2016-002
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