More Funding will Continue
Study on Economic
Consequences of Terrorism

S. Brock Blomberg, the Peter Barker Professor of Economics and George R. Roberts Fellow at the Robert Day School of Economics and Finance at CMC, has been awarded a grant extension from CREATE, an interdisciplinary national research center based at the University of Southern California and funded by the U.S. Department of Homeland Security.
The grant extension is for Blomberg's ongoing research, "Modeling and Estimating the Macroeconomic Consequences of Terrorism." The extension augments earlier work started by Blomberg in October 2008 on the behavioral aspects of terrorism vis-?-vis the macro economy.
According to Blomberg, who also is chair of the economics faculty at CMC, the total amount of funding from CREATE from the period of the initial grant in 2008 to when this new extension ends in September 2010 is $166,000.
CREATE (the National Center for Risk and Economic Analysis of Terrorism Events) itself is focused on risk and economic analysis of the U.S., and comprises a team of experts from across the country, including partnership arrangements with numerous universities and research institutions.
Blomberg's work summary provided several methodologies for understanding the underlying macroeconomic consequences of terrorism. Using a complex and compelling dataset incorporating World Bank figures on national income and growth, IMF data on financial conditions, data on domestic and international terrorism incidents and data on external and internal conflict, Blomberg arrived at some intriguing conclusions done in part in collaborations with Vice President for Academic Affairs and Dean of the Faculty Greg Hess, the Russell S. Bock Chair of Public Economics and Taxation at CMC.
For one, he estimates the impact of the terrorist attacks on 9/11 on the U.S. economy to have resulted in approximately a 0.05 percentage point decrease in GDP growth (or $60 billion).
"These estimates have to be seen in context of other economic costs," Blomberg says, "namely, a world in which the United States government has promised banks trillions, pledged trillions to reform our health care system, and spent trillions on the war in Iraq and Afghanistan.
"The research shows that the estimates are significant for this tragic event," he adds. "However, the fact that the magnitude is relatively small in relation to these other costs is testament to the resiliency of the American economy."