Economic impact of terrorism (again)

A question from Yahoo! Answers:

How did the semptember 11th attack affect our nation?

Since you are asking this question in the Economics section, you are probably asking about the economic impact. Brace yourself for an answer you probably don’t expect: it’s negligible. Attacks of September 11 did less economic damage than Hurricane Andrew in 1992 or Northridge earthquake in 1994.

In order for terrorism to have a lasting economic effect, it must occur repeatedly over long periods of time. For example, economists Alberto Abadie and Javier Gardeazabal studied the economy of the Basque Country (a region in Spain where terrorists linked to separatist groups committed terrorist acts for almost 20 years) and concluded that the cost of terrorism over 20 years was about 10 percentage points in the cumulative economic growth.

Source:

Alberto Abadie, Javier Gardeazabal, “The Economic Costs of Conflict: A Case-Control Study for the Basque Country”:

http://www.nber.org/papers/W8478

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