Core and Periphery -- The Dual Effect of Terror

Shoham, Amir; Rosenboim, Mosi; Malul, Miki; Saadon, Yossi

doi:10.2202/1554-8597.1220

Cited by 4 publications

(2 citation statements)

References 13 publications

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“…Nevertheless, terrorist attacks a¤ect consumer and investor behavior and, in turn, stock market prices (Shoham et al, 2011;Kollias et al, 2011). When terrorists strike at regular intervals and fear and insecurity win minds and begin to change agents' economic behavior, the quality of economic (expert and marketbased) forecasts would be a¤ected by these transitory events.…”

Section: Terrorism and Uncertaintymentioning

confidence: 99%

Forecast Performance in Times of Terrorism

Benchimol¹,

El‐Shagi²

2020

gwp

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Governments, central banks, and private companies make extensive use of expert and market-based forecasts in their decision-making processes. These forecasts can be affected by terrorism, a factor that should be considered by decision-makers. We focus on terrorism as a mostly endogenously driven form of political uncertainty and assess the forecasting performance of market-based and professional inflation and exchange rate forecasts in Israel. We show that expert forecasts are better than market-based forecasts, particularly during periods of terrorism. However, the performance of both marketbased and expert forecasts is significantly worse during such periods. Thus, policymakers should be particularly attentive to terrorism when considering inflation and exchange rate forecasts.

show abstract

Section: Terrorism and Uncertaintymentioning

confidence: 99%

Forecast Performance in Times of Terrorism

Benchimol¹,

El‐Shagi²

2020

gwp

View full text Add to dashboard Cite

show abstract

“…Nevertheless, terrorist attacks a¤ect consumers and investors' behavior and, in turn, stock market prices (Shoham et al, 2011). When terrorists strike at almost regular intervals and fear and insecurity win minds and begin to change agents' economic behavior, the quality of economic (expert and market-based) forecasts would be a¤ected by these transitory events.…”

Section: Terrorism and Uncertaintymentioning

confidence: 99%

Forecast performance in times of terrorism

Benchimol¹,

El‐Shagi

2020

Economic Modelling

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Governments, central banks, and private companies make extensive use of expert and market-based forecasts in their decision-making processes. These forecasts can be a¤ected by terrorism, which should be considered by decision makers. We focus on terrorism, as a mostly endogenously driven form of political uncertainty, and use new econometric tests to assess the forecasting performance of market and professional in ‡ation and exchange-rate forecasts in Israel. We show that expert forecasts are better than market-based forecasts, particularly during periods of terrorism. However, forecasting performance and abilities of both market-based and expert forecasts are signi…cantly reduced during such periods. Thus, policymakers should be particularly attentive to terrorism when considering in ‡ation and exchange-rate forecasts.

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The Cross-Border Impact of Political Violence

Al-Ississ

2015

Peace Economics, Peace Science and Public Policy

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This paper documents the reallocation of financial and economic resources after political violence to other countries. It analyzes the impact of 66 political violence events that took place in 32 countries on 57 stock exchanges over a period of 20 years. Using the event study methodology, this paper is the first to document a positive financial impact from political violence in other countries. The results show that in globally integrated markets, the substitution of financial and economic activities away from afflicted countries magnifies their losses. On average over a 20 day window, event countries suffered a 2.9% drop in stock valuation while other countries picked a windfall of 0.8%. Additionally, the paper investigates the geographic, economic, and risk determinants of this cross-border flow of capital.

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Core and Periphery -- The Dual Effect of Terror

Cited by 4 publications

References 13 publications

Forecast Performance in Times of Terrorism

Forecast Performance in Times of Terrorism

Forecast performance in times of terrorism

The Cross-Border Impact of Political Violence

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