The Macroeconomic Effects of Terrorism

Author/Creator

Author/Creator ORCID

Date

2010

Department

Economics

Program

Bachelor's Degree

Citation of Original Publication

Rights

Collection may be protected under Title 17 of the U.S. Copyright Law. To obtain information or permission to publish or reproduce, please contact the Goucher Special Collections & Archives at 410-337-6347 or email archives@goucher.edu.

Abstract

This paper was written for EC 397, a seminar in macroeconomics. The topic of terrorism’s impact on the economy fascinated me since it was not a topic I had heard discussed much in the media, or in an academic setting. Terrorism has become an emotionally charged subject, and much has been made of eliminating terrorism at all costs. Conventional economic theory holds that any decision involves examining the differences between the costs and benefits of an action. Counter-terrorism should follow this same logic, and thus an economist would argue that we should see how much protective measures might cost, while seeing what benefits would accrue from enacting these measures. Advocating the idea that some terrorism should exist if it is too costly to prevent it is a fairly poor career move for any politician, but it is certainly a fascinating topic for an academic examination. My paper focused on the various aspects of GDP, and the ways terrorism impacted them as a way to analyze the benefits of preventing terrorism, and a way to quantify some of the emotionally charged discussions on the subject.