The Impact of Terrorism on the Defense Industry

38 Pages Posted: 26 May 2005

See all articles by Claude Berrebi

Claude Berrebi

Hebrew University of Jerusalem - School of Public Policy; Hebrew University - School of Public Policy ; Princeton University; UCLA; RAND Corporation; Taub Center

Esteban F. Klor

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: July 1, 2008

Abstract

This paper analyzes the impact of terrorism on Israeli companies related to the defense, security or anti-terrorism industries, relative to its impact on the rest of the companies. The authors match every Israeli company to the American company with the closest expected return among all the companies that belong to the same industry and trade in the same market in order to isolate the effect of terrorism from other common industry shocks. The findings show that whereas terrorism had a significant negative impact of 5% on non defense-related companies, it had a significantly positive overall effect of 7% on defense-related companies.

Keywords: Terror; Defense Sector; Financial Markets

JEL Classification: D74, G14, K42, L64, P16

Suggested Citation

Berrebi, Claude and Klor, Esteban F., The Impact of Terrorism on the Defense Industry (July 1, 2008). RAND Working Paper Series WR- 597, Available at SSRN: https://ssrn.com/abstract=729006 or http://dx.doi.org/10.2139/ssrn.729006

Claude Berrebi

Hebrew University of Jerusalem - School of Public Policy ( email )

Jerusalem, 91905
Israel
+97225880151 (Phone)

HOME PAGE: http://https://en.public-policy.huji.ac.il/people/claude-berrebi

Hebrew University - School of Public Policy ( email )

Jerusalem, 91905
Israel
+97225880151 (Phone)

HOME PAGE: http://https://en.public-policy.huji.ac.il/people/claude-berrebi

Princeton University ( email )

Woodrow Wilson School
Public and International Affairs
Princeton, NJ 08544
United States
609-591-5886 (Phone)
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HOME PAGE: http://wws.princeton.edu/sites/default/files/person/cvfiles/CV-20190101-HU-Princeton.pdf

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RAND Corporation ( email )

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HOME PAGE: http://https://www.rand.org/pubs/authors/b/berrebi_claude.html

Taub Center ( email )

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HOME PAGE: http://dev.taubcenter.org.il/claude-berrebi/

Esteban F. Klor (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3143 (Phone)
+972 2 581 6071 (Fax)

HOME PAGE: http://economics.huji.ac.il/facultye/klor/klor.htm

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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