Date: January 4, 2011
American Economic Association
Jan 08, 2011 10:15 am, Sheraton, Governor’s Square 15
Economic Impacts of the September 11 Attacks: A Ten-Year Retrospective
Presiding: ADAM ROSE (University of Southern California)
World Trade Center Tenant Relocation Patterns after September 11th, 2001
ALBERTO ABADIE (Harvard University)
SOFIA DERMISI (Roosevelt University)
Calculating the Macroeconomic Costs and Benefits of September 11
GREGORY HESS (Claremont McKenna College)
Decomposing the Economic Impacts of 9-11
ADAM ROSE (University of Southern California)
BROCK BLOMBERG (Claremont Mckenna College)
New Empirics of Transnational Terrorism and Its Impact on Economic Growth
TODD SANDLER (University of Texas-Dallas)
KHUSRAV GAIBULLOEV (Kazakhstan Institute of Management, Economics and Strategic Research)
DONGGYU SUL (University of Texas-Dallas)
Discussants:
MARTIN FELDSTEIN (Harvard University and NBER)
EDWARD GLAESER (Harvard University)
ALAN KRUEGER (Princeton University)
BRYAN ROBERTS (Dept of Homeland Security)
PANEL ABSTRACT
Economic Impacts of the September 11 Attacks: A Ten-Year Retrospective
Session Organizers: Adam Rose (USC) and S. Brock Blomberg (Claremont-McKenna College)
Authors: Alberto Abadie (Harvard) and Sofia Dermisi (Roosevelt) — World Trade Center Tenant Relocation Patterns after September 11th, 2001
Discussant: Ed Glaeser (Harvard)
The World Trade Center (WTC) attacks on 9/11 completely destroyed buildings that housed thousands of office employees and attracted many visitors. The CoStar Group – the premier national real estate information company – and CNN reported that in the six affected buildings (Towers 1 and 2, and buildings 4 through 7) there were 324 tenants with a variety of leased square feet. Our study focused on the 81 tenants with at least 20,000 leased square feet in any of the affected WTC Complex buildings. These tenants were permanently displaced with the destruction of the WTC buildings and required significant long-term office space elsewhere. We study their relocation patterns through 2009. Our results reveal: i) differences between the first and second relocations; ii) selection of multiple relocation sites for many tenants; iii) agglomeration of relocated tenants in certain areas of downtown Manhattan.
Authors: Greg Hess (Claremont-McKenna) — Calculating the Macroeconomic Costs and Benefits of September 11
Discussant: Alan Krueger (Princeton)
The terrorist attacks on the United States on September 11, 2001 are salient events for U.S. and world history. The consequences from this date extend beyond the national borders of the United States due to economic and geopolitical linkages. The extent to which the attack on the U.S.precipitated the U.S.’s participation in external conflicts (e.g. Afghanistan and Iraq) that it would not otherwise been involved in needs to be taken into account when calculating the costs of 9/11. Moreover, the escalation of conflicts with other countries (e.g., Iran) also have involved real resources that could have gone to other purposes, such as consumption, non-military government expenditures or savings. We view the increase in opportunity costs from this rise in military spending largely as a direct response to the 9/11 attacks and contend that it captures much of the fullness of the U.S. response to 9/11. Following the methodology in Blomberg and Hess (2010), we calculate the equivalent variation from the U.S. moving from the pre 9/11 long-run consumption path to the post-9/11 consumption path associated with the adjusted path of military spending. Our findings, using a range of plausible assumptions about parameter values and long-run spending, suggest that the economics costs of the 9/11 attacks far exceed the costs associated with terrorist activities.
Adam Rose (USC) and Brock Blomberg (Claremont-McKenna)– Decomposing the Economic Impacts of 9-11
Discussant: Bryan Roberts (DHS)
Osama bin Laden has stated his intent to ruin the U.S. economy. This paper addresses the reason why the 2001 attacks on the World Trade Center fell far short of this goal. It provides estimates of the various types of economic impacts and the factors that affected their relative magnitudes. Special attention will devoted to the resilience of the New York Metro and U.S. economies, how changes in risk perceptions translated into changes in economic behavior, countervailing federal reserve and fiscal policies, market and non-market costs of anti-terrorism activities in the U.S., costs of military action overseas, and the influence of cyclical and secular trends. The analysis is based on a collaborative research effort of eight modeling teams through a research process that included: a common scope and set of basic assumptions and data, and several iterations of comparing and refining simulations and econometric tests.
Authors: Todd Sandler, Khrusrav Gaibulloev, Donggyu Sul (UT-Dallas) — New Empirics of Transnational Terrorism and Its Impact on Economic Growth
Discussant: Martin Feldstein (Harvard, NBER)
This paper applies principal components analysis to decompose transnational terrorism during 1970-2007 into common and idiosyncratic factors. A single common factor is related to individual countries’ transnational terrorist events. Three countries’ transnational terrorist incidents explain 90% of the variation in the common driver of transnational terrorism, with Lebanon accounting for 67%. A correlation coefficient approach shows that neither the growth rate of real GDP, nor the growth rates of its expenditure components are significantly correlated with terrorism. Separate panel regressions of these growth rates on the overall and common factors of transnational terrorism also indicate no significant relationships.