Small Investment and Large Returns: Terrorism, Media and the Economy

European Economic Review 54 (2010)

11 Pages Posted: 23 Dec 2013

See all articles by Rafi Melnick

Rafi Melnick

Interdisciplinary Center Herzliya

Rafi (Rafael) Eldor

Interdisciplinary Center (IDC) Herzliya - Arison School of Business

Date Written: 2010

Abstract

The study investigates the role of the media in the impact of terrorism on the economy. A unique data set of the newspaper articles that reported terrorist attacks during 2002 is used to evaluate their impact on the Tel Aviv Stock Exchange. An econometric analysis is performed in order to understand how a newspaper decides to cover a terrorist attack, i.e. the number of articles, positioning of articles, whether to include photos and the size of headlines. It was found that media coverage is an important channel through which terrorism produces economic damage. The findings also showed that the economic damage caused by terrorist attacks increases monotonically with the amount of media coverage. It was also found that the economic impact of the media coverage diminishes over time.

Keywords: Terror, Terrorism, Media, Stock markets, September 11

JEL Classification: G10, G14

Suggested Citation

Melnick, Rafi and Eldor, Rafi (Rafael), Small Investment and Large Returns: Terrorism, Media and the Economy (2010). European Economic Review 54 (2010), Available at SSRN: https://ssrn.com/abstract=2370994

Rafi Melnick (Contact Author)

Interdisciplinary Center Herzliya ( email )

P.O. Box 167
Herzliya, 4610101
Israel

Rafi (Rafael) Eldor

Interdisciplinary Center (IDC) Herzliya - Arison School of Business ( email )

P.O. Box 167
Herzliya, 46150
Israel
972-9-952-7234 (Phone)
972-9-956-3616 (Fax)

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