THE IMPACT OF ANTI-TERRORISM EXPENDITURE ON ECONOMIC GROWTH AND WELFARE

Authors


Cheng-Lang Yang, Department of Managerial Economics, Nanhua University, Chiayi 82445, Taiwan. Tel: +886-936290902; Fax: +886-5-2721001; Email: chenglang@mail.nhu.edu.tw. The authors are deeply indebted to two anonymous referees for their helpful suggestions and insightful comments on an earlier version of this paper. We alone are responsible for all the views and any remaining shortcomings herein.

ABSTRACT

This paper examines the effects of increasing anti-terrorism expenditure on economic growth rate and social welfare. It is shown that: (i) spending the least amount possible on anti-terrorism expenditure will lead to a maximum economic growth rate; and (ii) to achieve maximum social welfare, the government should allocate its budget to anti-terrorism expenditure. The results shed light on why the US government has chosen to uphold and pursue its anti-terrorism policies in recent years to present day.

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