Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 686: Decentralization as a disincentive for transnational terror? An empirical test.

Axel Dreher () and Justina AV Fischer ()
Additional contact information
Axel Dreher: Swiss Economic Institute, ETH Zurich, Postal: Swiss Economic Institute, ETH Zurich, Weinbergstrasse 35, 8092 Zurich, Switzerland and , CESifo, Munich
Justina AV Fischer: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: Using panel data for a maximum of 109 countries over the years 1976-2000, we empirically analyze the impact of decentralization on the occurrence of transnational terror. Taking account of the potential simultaneity between terror and decentralization, our results show that expenditure decentralization robustly reduces the number of terror events in a country, while political decentralization has no impact.

Keywords: Terrorism; Decentralization; Democracy

JEL-codes: D74; H40; H70

28 pages, December 20, 2007

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