The Economic Costs of Conflict: A Case Study of the Basque Country
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- 1 February 2003
- journal article
- Published by American Economic Association in American Economic Review
- Vol. 93 (1) , 113-132
- https://doi.org/10.1257/000282803321455188
Abstract
This article investigates the economic effects of conflict, using the terrorist conflict in the Basque Country as a case study. We find that, after the outbreak of terrorism in the late 1960's, per capita GDP in the Basque Country declined about 10 percentage points relative to a synthetic control region without terrorism. In addition, we use the 1998–1999 truce as a natural experiment. We find that stocks of firms with a significant part of their business in the Basque Country showed a positive relative performance when truce became credible, and a negative relative performance at the end of the cease-fire.Keywords
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