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The Effect of Terrorism on Consumer Confidence in Europe
Sharifullah, Maria Gulzar
Sharifullah, Maria Gulzar
Date
2024-12
Authors
Advisor
Type
Thesis
Degree
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Description
A Master of Business Administration (MBA) thesis by Maria Gulzar Sharifullah entitled, “The Effect of Terrorism on Consumer Confidence in Europe”, submitted in December 2024. Thesis advisor is Dr. Khusrav Gaibulloev. Soft copy is available (Thesis, Approval Signatures, Completion Certificate, and AUS Archives Consent Form).
Abstract
Terrorism studies tend to focus on the macro-economic effects, which seem to be significant in the short-run but insignificant in the long-run, emphasizing the need to develop a deeper understanding of micro-level effects. In particular, the impact of terrorism on the driving force of our economy – consumers – has been underresearched. Using monthly panel data from 23 European countries from 1973-2019, this study examines the effect of terrorism on consumer confidence in Europe. To test this micro-level relationship, we use a unique identification strategy, where we exploit the inherent randomness in the success or failure of an attack in order to overcome endogeneity issues and establish a direct causal relationship. We, therefore, directly compare the effect of successful attacks to failed attacks on consumer confidence. Our results reveal that compared to failed attacks, successful attacks lead to a significant and persistent negative impact on consumer confidence.