The Economic Consequences of Terrorism

The unprecedented 11 September 2001 terrorist attacks in the United States caused massive casualties and damage, and ushered in an era of greater uncertainty. While a prompt and vigorous policy response helped limit the immediate economic impact of the aggression, the heightened terrorist threat has some long-lasting, if diffuse, macroeconomic repercussions. Three channels of influence are explored in this paper: shrinking insurance coverage stemming from the perception of greater risk, higher trade costs possibly affecting international trade, and stepped-up security spending partially rolling back the “peace dividend” of the 1990s. It is argued that, in the absence of new large-scale terrorist attacks, and provided terrorism risk is dealt with efficiently, the net long-run macroeconomic impact is probably tangible but limited ... Les consequences economiques du terrorisme Les attentats sans precedent du 11 septembre 2001 aux Etats-Unis ont cause des pertes humaines et des degâts materiels enormes, et ont inaugure une ere de plus grande incertitude. Si une reponse rapide et vigoureuse des responsables a aide a limiter l’impact economique immediat de l’agression, le renforcement de la menace terroriste a des repercussions macroeconomiques durables, quoique diffuses. Trois canaux d’influence sont examines dans la presente etude : une couverture d'assurance reduite resultant de la perception de risque plus important, des couts de transaction plus eleves pouvant affecter le commerce international, et une augmentation des depenses de securite renversant partiellement le « dividende de la paix » des annees 90. Il en ressort qu’en l’absence de nouvelles attaques de grande ampleur, et a condition que le risque terroriste soit gere efficacement, l’impact macroeconomique net a long terme est probablement tangible mais limite ...