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Keywords:

  • anti-terrorism;
  • economic growth;
  • government spending;
  • social welfare
  • H56;
  • O40;
  • O41

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.