Public Economics and Policy Seminar - Nicola Limodio (Bocconi University )
Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment
I present empirical evidence showing that terrorism financing and recruitment promote terrorist attacks. Pakistan offers an ideal setting for this research due to a natural experiment inducing exogenous variation in terrorism financing. In line with terrorist organisations facing financial frictions, I find a correspondence between the timing and location of finance and the attacks by organisations exposed to this transfer. The effect of financing on attacks increases in recruitment, measured by combining dark web data and machine learning. These results suggest that financial counter-terrorism lowers attacks, which I quantify by estimating the elasticity of terrorist attacks to financing (0.25).