The Effects of the Human Cost of Terror on National Income, Private Consumption and Investment in Pakistan

Abstract

The main focus of this article is to investigate the short- and long-run causal effects of human cost of terror on gross domestic product (GDP), private consumption and private investment in Pakistan by using autoregressive distributed lag techniques. The results confirm the long-run association between the human cost of terror, GDP, private consumption and private investment and suggest that the human cost of terror adversely affects GDP and private investment, and positively influences private consumption in the long run. Furthermore, the results in the study reveal that the human cost of terror negatively affect GDP and private investment and increases private consumption in the short run. The overall findings of the article suggest that the human cost of terror drags the economy down, discourages private investment and distorts the pattern of private consumption in Pakistan.