This paper argues that terrorism, beyond its immediate impact on innocent victims, also raises the costs of crime, and therefore, imposes a negative externality on potential criminals. Terrorism raises the costs of crime through two channels: (i) by increasing the presence and activity of the...

This paper argues that terrorism, beyond its immediate impact on innocent victims, also raises the costs of crime, and therefore, imposes a negative externality on potential criminals. Terrorism raises the costs of crime through two channels: (i) by increasing the presence and activity of the...

The goal of terrorism is to create havoc and disrupt the normal functioning of society. To understand the impact of terrorism on a country it is useful to consider two types of country experiences with these shocks to the social order — the instance of a very small number of attacks against...

Terrorist attacks in the United States and in Western Europe have been rare, and public awareness of the terrorist menace has largely been molded by a few horrific events. In contrast, other countries have experienced chronic terrorism, with attacks on buses, restaurants, coffee shops, and...