Exploring the dynamics between terrorism and anti-terror spending: Theory and UK-evidence

Kerim Arin, Oliver Lorz, Otto F.M. Reich and Nicola Spagnolo

Journal of Economic Behavior & Organization, 2011, vol. 77, issue 2, 189-202

Abstract: Abstract Recent years have seen governments restricting civic freedoms and legislating significant increases in spending to combat terrorist activities. In this paper, we investigate the relationship between anti-terror spending and terrorism. In line with previous findings in the empirical literature on terrorist activity, our game-theoretic model of the interaction between a benevolent government and a terrorist organization is suggestive of a non-linear relation between terrorism and counter-terrorism spending. Using UK data, our empirical Markov-switching implementation provides evidence in favor of this approach. The empirical results also show that the probability of transiting into a state with high terror is smaller if defense spending is high.

Keywords: Defense; spending; Markov; switching; Terrorism (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:77:y:2011:i:2:p:189-202

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