Omay, Tolga and Takay Araz, Bahar and Ilalan, Deniz (2011): The effects of terrorist activities on foreign direct investment: nonlinear Evidence.
This is the latest version of this item.
Download (298kB) | Preview
In this study, we examine the relationship between foreign direct investment and terrorist incidents that took place in Turkey for the period from 1991:12 to 2003:12. This research contributes to the literature by checking for a possible non-linear relationship between terrorism and foreign direct investment. The data used to measure the intensity of terrorism were collected from the newspapers of Turkey, and therefore are limited to the direct signals given to the market. Empirical evidence from both linear and non-linear models confirms that terrorism has a large significant negative impact on foreign direct investment. With respect to the nonlinear model, the impact of terrorism on the foreign direct investment is more severe during periods of high terrorism when the intensity of terrorism passes the threshold level 3.725.
|Item Type:||MPRA Paper|
|Original Title:||The effects of terrorist activities on foreign direct investment: nonlinear Evidence|
|Keywords:||Terror; FDI, Smoot Transition Model|
|Subjects:||C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements
J - Labor and Demographic Economics > J1 - Demographic Economics > J18 - Public Policy
|Depositing User:||Tolga Omay|
|Date Deposited:||20 May 2011 19:25|
|Last Modified:||01 Dec 2016 21:23|
Araz-Takay, B., Arin K. P., and Omay, T. (2009). The endogenous and non-linear relationship between terrorism and economic performance: Turkish evidence. Defence and Peace Economics, 20(1), pages 1-10.
Abedie, A. (2006) Poverty, political freedom, and the roots of terrorism. American Economic Review (Papers andProceedings) 96(2), 50–56.
Abedie, A., and Gardeazabal, J. (2003). The economic costs of conflict: a case study of the Basque country. American Economic Review 93(1), 113–132.
Abedie, A., and Gardeazabal, J. (2005). Terrorism and the world economy. Unpublished manuscript.
Alesina, A., Ozler, S. Roubini, N. and Kwagel, P. (1996). Political instability and economic growth. Journal of Economic Growth 1, 189–211.
Anderson, H. M., and Vahid, F. (1998). Testing multiple equation systems for common nonlinear components. Journal of Econometrics 84, 1–36.
Arnold, J., Ersoy, G., and Rodoplu, U. (2004). Terrorism in Turkey. Prehospital and Disaster Medicine 18(2), 152–160.
Barro, R.J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics 106(2), 407–443.
Barros, C.P. (2003). An intervention analysis of terrorism: the Spanish ETA case. Defence and Peace Economics 14(6), 401–412.
Becker, G. and Murphy, K. (2001). Prosperity will rise out of the ashes. Wall Street Journal October 29.
Blomberg, S.B., Hess, G.D. and Orphanides, A. (2004). The macroeconomic consequences of terrorism. Journal of Monetary Economics 51(5), 1007–1032.
Doan, T. (1992). RATS User’s Manual. Evanston, Ill.: Estima
Eckstein, Z., and Tsiddon, D. (2004). Macroeconomic consequences of terror. Journal of Monetary Economics 51(5), 971–1002.
Eitrheim, O., and Terävirta T. (1996). Testing the adequacy of smooth transition autoregressive models. Journal of Econometrics 74, 59–76.
Enders, W., and Sandler, T. (1991). Causality between transnational terrorism and tourism: the case of Spain. Terrorism 14(1), 49–58.
Enders, W., and Sandler, T. (1992). A time series analysis of transitional terrorism: trends and cycles. Defence Economics 3(4), 305–320.
Enders, W., and Sandler, T. (2005). Transnational terrorism 1968-2000: thresholds, persistence, and forecasts. Southern Economic Journal 71(3), 467–482.
Granger, C.W.J. and Teräsvirta, T. (1993). Modelling nonlinear economic relationships. Advanced Texts in Econometrics.New York, Toronto and Melbourne: Oxford University Press.
Luukkonen, R., Saikkonen, P., and Teräsvirta, T. (1988). Testing linearity against smooth transition autoregressive models. Biometrika 75, 491–499.
Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics 110(3), 681–712.
Nitsch, V., and Schumacher, D. (2004) Terrorism and international trade. European Journal of Political Economy 20(2), 423–433.
Pötscher, B.M., and Prucha, I.V. (1997). Dynamic Nonlinear Econometric Models: Asymptotic Theory. Berlin: Springer-Verlag.
Potter, N.M. (1995). A nonlinear approach to US GDP. Journal of Applied Econometrics 10, 109–125.
Pesaran, M.H., and Potter, S.M. (1997). A floor and ceiling model of US output. Journal of Economic Dynamics and Control 21, 661–695.
Rübbelke, D.T.G. (2005). Differing motivations for terrorism. Defence and Peace Economics 16(1), 19–27.
Santos Bravo, A.B., and Mendes Dias, C.M. (2006). An empirical analysis of terrorism: deprivation, Islamism and geopolitical factors. Defence and Peace Economics 17(4), 329–341. Teräsvirta, T. (1994). Specification, estimation, and evaluation of smooth transition autoregressive models. Journal of the American Statistical Association 89, 208–218.
Teräsvirta, T., and Anderson, H.M. (1992). Characterizing nonlinearities in business cycles using smooth transition autoregressive models. Journal of Applied Econometrics 7, 119–131.
Van Dijk, D. (1999). STR models extensions and outlier robust inference. Tinbergen Institute Research Series,No. 200.
White, H., and Domowitz, I. (1984). Nonlinear regression with dependent observations. Econometrica 52, 143–161.
Available Versions of this Item
- The effects of terrorist activities on foreign direct investment: nonlinear Evidence. (deposited 20 May 2011 19:25) [Currently Displayed]