Clements, BenedictGupta, SanjeevJalles, João TovarKhamidova, Saida2020-09-042020-09-042020-08Clements, Benedict ... [et al.] (2020). "Terror and its fiscal consequences". Instituto Superior de Economia e Gestão – REM Working paper nº 0140 – 20202184-108Xhttp://hdl.handle.net/10400.5/20249We explore the impact of major terrorism shocks on macroeconomic and fiscal variables´ dynamics using an unbalanced panel of 191 heterogeneous countries from 1970 to 2018. By means of the local projection method, we find that a terrorist shock lowers a country’s real GDP as well as government tax revenues and raises debt-to-GDP ratio. The composition of government spending shifts in favor of military spending. Low-income countries are affected more than both emerging market and advanced economies. Our results are robust to a battery of sensitivity and robustness tests.engfiscal policygrowtharmed conflictterrorismpanel datalocal projection methodseemingly unrelated regressionsworking paper