Economic Determinants Affecting Terrorism in case of Pakistan: An ARDL Bounds Testing Approach to Co–integration

Abstract

This study aims to examine the economic determinants affecting terrorism and its impact on Pakistan. The time series data over the time span from 1986 to 2015 has been utilized. The impact is measured methodically under the factors like inflation, growth of economy, unemployment, openness of trade, using an autoregressive distributed lag model. The factors showed co-integration. From the results of this study a negative relationship between the terrorism and economic growth of Pakistan has been found to exist in short and long run. On the basis of empirical findings, the study further recommends that there was negative impact of the terrorism on economic growths, so to achieve a higher rate of economic growth the government must make effective policies and take actions accordingly to reduce all forms of terrorism.