Analysis What is the economic cost of terrorism? It feels frivolous to ask that question after the horrific Paris attacks, but it is one of the central issues with which policymakers and investors are grappling. The conventional wisdom is that an act of terrorism accounts for a mere blip in economic damage. Economists often point to research showing that after the Madrid train bombings in 2004 and the London subway bombings in 2005, gross domestic product in those countries barely budged and showed little direct correlation to the attacks. Even in the United States after the September 11 attacks, consumption remained relatively stable, although investment fell. (There have been bigger...
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