TIME-VARYING ECONOMIC CONSEQUENCES OF TERRORISM IN THE USA: EVIDENCE FROM TVP-SVAR MODEL

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AYDIN H. İ., YALÇINKAYA Ö., Bulut E.

ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, vol.56, no.2, pp.133-148, 2022 (SCI-Expanded) identifier

  • Publication Type: Article / Article
  • Volume: 56 Issue: 2
  • Publication Date: 2022
  • Doi Number: 10.24818/18423264/56.2.22.09
  • Journal Name: ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Business Source Elite, Business Source Premier, EconLit, INSPEC, zbMATH
  • Page Numbers: pp.133-148
  • Keywords: Terrorism, The Components of Economic Growth, Terrorism Index, USA, TVP-SVAR, MACROECONOMIC CONSEQUENCES, UNIT-ROOT, GROWTH, COST
  • Ataturk University Affiliated: Yes

Abstract

This study aims to examine the economic consequences of terrorism (the effects on economic growth and its components) in the U.S. as it suffers from the 9/11 attacks, which is a milestone of literature on the economic consequences of terrorism. We analyze the time-varying effects of terrorism on economic growth and its components in the U.S. for the period of 1970:Q1-2020:Q4 with the nonlinear Time-Varying Parameter Structural Vector Autoregression (TVP-SVAR) model. We construct an index over the values of all measurable dimensions (the number of terrorist incidents, the number of deaths, and the number of injured) of the terrorist acts carried out in the USA. The results show that the time factor is important in revealing the economic consequences of terrorism in the USA. In addition, the effects of terrorism on economic growth and its components have changed significantly in the periods before/after 11/9 and in the short/long term. These results point out the importance of designing security policies that limit the effects of insecurity and uncertainty created by terrorism on the spending decisions of economic actors.