We report robust evidence of adverse cross-border externalities from terrorism on trade for over 160 countries from … 1976 to 2014. Terrorism in one country spills over to reduce trade in neighboring nations. These externalities arise from …

) to capture the effects of terrorism on air passenger traffic between nations affected by terrorism. We then use equations … terrorism on bilateral air passenger flows from 57 source countries to 25 destination countries for the period of 2000 to 2014 …%. Terrorism adversely impacts the bilateral air passenger transport per unit distance both by reducing national output and …

This paper investigates the interplay of trade and terrorism externalities under free trade between a developed nation …