The economic impacts of the september 11 terrorist attacks: A computable general equilibrium analysis

Adam Z. Rose, Gbadebo Oladosu, Bumsoo Lee, Garrett Beeler Asay

Research output: Contribution to journalArticle

Abstract

This paper develops a bottom-up approach that focuses on behavioral responses in estimating the total economic impacts of the September 11, 2001, World Trade Center (WTC) attacks. The estimation includes several new features. First, is the collection of data on the relocation of firms displaced by the attack, the major source of resilience in muting the direct impacts of the event. Second, is a new estimate of the major source of impacts off-site - the ensuing decline of air travel and related tourism in the U.S. due to the social amplification of the fear of terrorism. Third, the estimation is performed for the first time using Computable General Equilibrium (CGE) analysis, including a new approach to reflecting the direct effects of external shocks. This modeling framework has many advantages in this application, such as the ability to include behavioral responses of individual businesses and households, to incorporate features of inherent and adaptive resilience at the level of the individual decision maker and the market, and to gauge quantity and price interaction effects across sectors of the regional and national economies. We find that the total business interruption losses from the WTC attacks on the U.S. economy were only slightly over $100 billion, or less than 1.0% of Gross Domestic Product. The impacts were only a loss of $14 billion of Gross Regional Product for the New York Metropolitan Area.

Original languageEnglish (US)
Article number4
JournalPeace Economics, Peace Science and Public Policy
Volume15
Issue number2
DOIs
StatePublished - Sep 28 2009

Fingerprint

World Trade Center
computable general equilibrium analysis
behavioral response
economic impact
world trade
air transportation
bottom-up approach
resilience
terrorism
regional economy
national economy
relocation
Gross Domestic Product
metropolitan area
gauge
amplification
tourism
September 11, 2001
gross domestic product
move

Keywords

  • Computable general equilibrium analysis
  • Economic consequence analysis
  • September 11
  • Terrorist attacks

ASJC Scopus subject areas

  • Sociology and Political Science
  • Economics and Econometrics
  • Political Science and International Relations
  • Management, Monitoring, Policy and Law

Cite this

The economic impacts of the september 11 terrorist attacks : A computable general equilibrium analysis. / Rose, Adam Z.; Oladosu, Gbadebo; Lee, Bumsoo; Asay, Garrett Beeler.

In: Peace Economics, Peace Science and Public Policy, Vol. 15, No. 2, 4, 28.09.2009.

Research output: Contribution to journalArticle

@article{a509c952fe9a49d88e5dbeccf8ec3c5a,
title = "The economic impacts of the september 11 terrorist attacks: A computable general equilibrium analysis",
abstract = "This paper develops a bottom-up approach that focuses on behavioral responses in estimating the total economic impacts of the September 11, 2001, World Trade Center (WTC) attacks. The estimation includes several new features. First, is the collection of data on the relocation of firms displaced by the attack, the major source of resilience in muting the direct impacts of the event. Second, is a new estimate of the major source of impacts off-site - the ensuing decline of air travel and related tourism in the U.S. due to the social amplification of the fear of terrorism. Third, the estimation is performed for the first time using Computable General Equilibrium (CGE) analysis, including a new approach to reflecting the direct effects of external shocks. This modeling framework has many advantages in this application, such as the ability to include behavioral responses of individual businesses and households, to incorporate features of inherent and adaptive resilience at the level of the individual decision maker and the market, and to gauge quantity and price interaction effects across sectors of the regional and national economies. We find that the total business interruption losses from the WTC attacks on the U.S. economy were only slightly over $100 billion, or less than 1.0{\%} of Gross Domestic Product. The impacts were only a loss of $14 billion of Gross Regional Product for the New York Metropolitan Area.",
keywords = "Computable general equilibrium analysis, Economic consequence analysis, September 11, Terrorist attacks",
author = "Rose, {Adam Z.} and Gbadebo Oladosu and Bumsoo Lee and Asay, {Garrett Beeler}",
year = "2009",
month = "9",
day = "28",
doi = "10.2202/1554-8597.1161",
language = "English (US)",
volume = "15",
journal = "Peace Economics, Peace Science and Public Policy",
issn = "1079-2457",
publisher = "Walter de Gruyter GmbH",
number = "2",

}

TY - JOUR

T1 - The economic impacts of the september 11 terrorist attacks

T2 - A computable general equilibrium analysis

AU - Rose, Adam Z.

AU - Oladosu, Gbadebo

AU - Lee, Bumsoo

AU - Asay, Garrett Beeler

PY - 2009/9/28

Y1 - 2009/9/28

N2 - This paper develops a bottom-up approach that focuses on behavioral responses in estimating the total economic impacts of the September 11, 2001, World Trade Center (WTC) attacks. The estimation includes several new features. First, is the collection of data on the relocation of firms displaced by the attack, the major source of resilience in muting the direct impacts of the event. Second, is a new estimate of the major source of impacts off-site - the ensuing decline of air travel and related tourism in the U.S. due to the social amplification of the fear of terrorism. Third, the estimation is performed for the first time using Computable General Equilibrium (CGE) analysis, including a new approach to reflecting the direct effects of external shocks. This modeling framework has many advantages in this application, such as the ability to include behavioral responses of individual businesses and households, to incorporate features of inherent and adaptive resilience at the level of the individual decision maker and the market, and to gauge quantity and price interaction effects across sectors of the regional and national economies. We find that the total business interruption losses from the WTC attacks on the U.S. economy were only slightly over $100 billion, or less than 1.0% of Gross Domestic Product. The impacts were only a loss of $14 billion of Gross Regional Product for the New York Metropolitan Area.

AB - This paper develops a bottom-up approach that focuses on behavioral responses in estimating the total economic impacts of the September 11, 2001, World Trade Center (WTC) attacks. The estimation includes several new features. First, is the collection of data on the relocation of firms displaced by the attack, the major source of resilience in muting the direct impacts of the event. Second, is a new estimate of the major source of impacts off-site - the ensuing decline of air travel and related tourism in the U.S. due to the social amplification of the fear of terrorism. Third, the estimation is performed for the first time using Computable General Equilibrium (CGE) analysis, including a new approach to reflecting the direct effects of external shocks. This modeling framework has many advantages in this application, such as the ability to include behavioral responses of individual businesses and households, to incorporate features of inherent and adaptive resilience at the level of the individual decision maker and the market, and to gauge quantity and price interaction effects across sectors of the regional and national economies. We find that the total business interruption losses from the WTC attacks on the U.S. economy were only slightly over $100 billion, or less than 1.0% of Gross Domestic Product. The impacts were only a loss of $14 billion of Gross Regional Product for the New York Metropolitan Area.

KW - Computable general equilibrium analysis

KW - Economic consequence analysis

KW - September 11

KW - Terrorist attacks

UR - http://www.scopus.com/inward/record.url?scp=70349337149&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=70349337149&partnerID=8YFLogxK

U2 - 10.2202/1554-8597.1161

DO - 10.2202/1554-8597.1161

M3 - Article

AN - SCOPUS:70349337149

VL - 15

JO - Peace Economics, Peace Science and Public Policy

JF - Peace Economics, Peace Science and Public Policy

SN - 1079-2457

IS - 2

M1 - 4

ER -