NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Javier Gardeazabal

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September 2001The Economic Costs of Conflict: A Case-Control Study for the Basque Country
with Alberto Abadie: w8478
This paper investigates the economic effects of conflict, using the terrorist conflict in the Basque Country as a case study. Our analysis rests on two different strategies. First, we use a combination of other regions to construct a 'synthetic' control region which resembles many relevant economic characteristics of the Basque Country before the outset of political terrorism in the 1970's. The subsequent economic evolution of this 'counterfactual' Basque Country without terrorism is compared to the actual experience of the Basque Country. We find that, after the outbreak of terrorism, per capita GDP in the Basque Country declined about 10 percent points relative to the synthetic control region. Moreover, this gap seemed to widen in response to spikes in terrorist activity. The second part...

Published: Abadie, Alberto and J. Gardeazabal. “The Economic Costs of Conflict: A Case Study of the Basque Country." American Economic Review 93, 1 (2003): 113-132.

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