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UIUC / Economics / ECON 490 / uiuc econ major

uiuc econ major

uiuc econ major

Description

School: University of Illinois at Urbana - Champaign
Department: Economics
Course: Economics of War and Terror
Professor: Das
Term: Spring 2017
Tags:
Cost: 50
Name: ECON 490 EXAM 1 STUDY GUIDE
Description: Exam 1 material
Uploaded: 12/14/2016
21 Pages 265 Views 1 Unlocks
Reviews



How to measure cycles?




How to measure trend and detrending a time series?




How are domestic and transnational terrorism related?



E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das October 1, 2016 E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 1 / 21These slides are not comprehensive and hence do not substitute all slides or material discussed in class. Length or the number of slides on topics doeDon't forget about the age old question of social psychology final exam
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s not indicate its weight in the exam. Exams will be based on material discussed in class and home works. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 2 / 21Introduction to Terrorism E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 3 / 21Terrorism: Introduction World map of terror incidents Rationality assumption and applicability of Economic Analysis Defining terrorism Three sets of agents associated with a terrorist act Differentiating between domestic and transnational terrorism Methods used in terror attacks 10 richest terror organizations Descriptions of Hamas, Hezobollah and Taliban Similarities and differences between Taliban and Al-Qaeda What terrorist organizations do besides engaging in violence Origin of terrorism and beginning of modern terrorism Rapoport’s four waves of terrorism Leftwing verus fundamentalist terrorists Major terrorist groups by orientation and incidents, 1970-2007 E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 4 / 21Dynamics of Terrorism E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 5 / 21Time Series Terrorism in the U.S. - various trends, characteristics Transnational Terrorism - various trends, characteristics and cross sections How are domestic and transnational terrorism related? Time series data decomposition into trend, cyclical and noise components How to measure trend and detrending a time series? How to measure cycles? Which measures or attributes of terrorism have time trends? Evidence on terror cycles Time series data from a causal perspective and schematic view of time series of terrorism Abu Nidal group and decline of terrorism in the 1990s Landes’s theoretical model and empirical analysis of skyjacking Intervention analysis and its application to terrorism. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 6 / 21Counter-Terrorism Policies E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 7 / 21Two Target Countries: Strategic Security-Deterrence Choice Terrorist organization in background Fundamental assumption of negative externality of SD choice by one target country on another Different properties of Di(s1,s2) functions and the cost functions ci(si). Upward sloping best response functions and Nash equilibrium. Comparative statics of (i) an increase in valuation from terror damage and (ii) A technology improvement in providing SD measures (asked in the homework). Cooperative solution and comparison with non-cooperative Nash solution. Main results: Because of negative externality, there is over-provision of SD measures. Compared to no-cooperation, cooperative solution entails that each target country lowers its SD measures. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 8 / 21Two Target Countries: Choice of Preemptive Measures Terrorist organization in background Fundamental assumption of positive externality of preemption choice by one target country on another Different properties of Di(z1 + z2) functions and the cost functions ci(zi). Downward sloping best response functions and Nash equilibrium. Comparative statics of (i) an increase in valuation from terror damage and (ii) A technology improvement in providing SD measures (asked in the homework). E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 9 / 21Two Target Countries: Choice of Pre-Emptive Measures, Cont. Cooperative solution and comparison with non-cooperative Nash solution. Main results: Because of positive externality, there is under-provision of pre-emptive measures. Compared to no-cooperation, cooperative solution entails that at least one target country enhance its preemptive measures. Cooperative solution would entail that the technologically superior country may step up its pre-emptive measures while the other would lower its pre-emptive measures if the technology differences are sufficiently large. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 10 / 21Explicitly Modeling the Terrorist Organization A model of one terrorist organization and two target countries, where the organization chooses terror attacks on two countries. Fundamental assumption: The organization maximizes its surplus. The problem is similar to a monopoly producing its output in one plant and selling its produce in two different markets. FOCs: MB1 = MB2 = MC. How an increase in SD measures by one target country affects the choice of the terrorist organization. Main result: An increase in SD measures by one country would induce the organization to increase its attack on the other according as its MC function is upward or downward sloping. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 11 / 21One Terrorist Organization and One Defending State - the Latter Chooses SD measures Nash equilibrium. Best response functions. Effects of a SD technology improvement Effects of increase in terrorism. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 12 / 21One Terrorist Organization and One Defending State - Latter Chooses SD and Preemptive measures Setting up of objective functions Preemptive measures shift up the MC function facing the terrorist organization. “An increase in terrorism” is modeled by a downward shift of the terrorist organization’s MC function. Two-stage game: In Stage 1 the state chooses SD and pre-emptive measures and in stage 2 the organization chooses its level of attacks. Backward solution of the problem. Main results: An increase in terrorism implies more stringent SD measures but it may or may not imply more pre-emptive measures: it depends on the fear factor. “Offense is the best defense” holds if the fear factor is strong. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 13 / 21Choice of Terrorist and Non-Terrorist Activities Utility function of the Organization and its budget constraint. SD measures tends to increase the relative cost of terrorist activities and exert substitution and income effect. They imply less terrorist activity, combined with more, less or no change in non-terrorist activity. Preemptive measures shift the budget line in and exert income effect only. They imply less terrorist and non-terrorist activities. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 14 / 21Intelligence/Infiltration, Networks E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 15 / 21Intelligence/Infiltration, Networks Intelligence/infiltration as defensive and offensive (preemptive) measures. Elements of network theory and the concept of density Trade-off between density and security Effect of more effective intelligence and infiltration on the nature of terror attacks E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 16 / 21Terror Cycles E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 17 / 21Terror Cycles Evidence on terror cycles Informal reasoning I copycat effects I new technology adoption I scale economies I terror cycle in tourism industry When can cycles arise mathematically? - (For understanding) I Own negative effect I Asymmetric cross or predator-prey effects Stock and dynamics of fear Terror cycle via optimal choice of security-deterrence Terror cycle via optimal choice of scale of attacks by a terrorist organization and the dynamics its resources E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 18 / 21Suicide Terrorism E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 19 / 21Kruger Argues that neither poverty or lack of education is the cause. Choice of terrorism is unlike the choice to engage crimes like robbery, burglary etc. Presents various evidence to support this. Points out that suicide terrorists didn’t have any psychological disorder either - altruism guided their choice and actions. Supply of suicide terrorists is very elastic. Political deprivation and lack of civil liberty may beget terrorism. E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 20 / 21Pape and Feldman Religious extremism per se is not the main reason. Suicide terrorism is more prevalent after 9/11 and U.S.’s military engagement in middle east and Afghanistan. Secular groups also engaged in suicide terrorism, notably LTTE. Instead of religion, 95% of suicide terrorist attacks had one common goal: to compel a democracy to pull out its forces from their prized territory. Religion was used as a recruiting tool. ‘Indirect occupation’ and suicide attacks in Pakistan. Policy recommendation: “offshore balancing.” Empirical work on Pape’s theory Suicide terrorism and foreign versus domestic occupation (Collard-Wexler, Pischedda and Smith) E490: Economics of Terror, War and Conflict Mid-Term Review Fall 2016 Satya P. Das 21 / 21

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