American Economic Review Vol. 93 No. 1 2003

The Economic Costs of Conflict: A Case Study of the Basque Country

Alberto Abadie¹; Javier Gardeazabal²

¹ John F. Kennedy School of Government, Harvard University, 79 John F. Kennedy Street, Cambridge, MA 02138. · ² Departamento Fundamentos del Análisis Económico II, Universidad del País Vasco, Avenida Lehendakari Aguirre 83, 48015 Bilbao, Spain.

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.

DOI

10.1257/000282803321455188

Volume

93

Issue

1

Pages

113-132

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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