Basque terrorism: police action, political measures and the influence of violence on the stock market in the Basque Country

  1. Carlos P. Barros 2
  2. Guglielmo Maria Caporale 1
  3. Luis A. Gil‐Alana 3
  1. 1 Brunel University London
    info

    Brunel University London

    Uxbridge, Reino Unido

    ROR https://ror.org/00dn4t376

  2. 2 Universidade de Lisboa
    info

    Universidade de Lisboa

    Lisboa, Portugal

    ROR https://ror.org/01c27hj86

  3. 3 Universidad de Navarra
    info

    Universidad de Navarra

    Pamplona, España

    ROR https://ror.org/02rxc7m23

Revista:
Defence and Peace Economics

ISSN: 1024-2694 1476-8267

Año de publicación: 2009

Volumen: 20

Número: 4

Páginas: 287 - 301

Tipo: Artículo

DOI: 10.1080/10242690701750676 WoS: WOS:000269732600003 GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: Defence and Peace Economics

Resumen

In the last 15 years, terrorist activity in the Basque Country has substantially decreased and strategies have changed. Whilst the type of killings has become more specialised (politicians, reporters, etc.), a new phenomenon based on urban guerrilla tactics, and called in Basque 'kale borroka' (street fighting), has emerged, creating an atmosphere of violence in the streets. The contribution of this paper is threefold. First, we create a daily measure of the level of violence in the area. Second, we examine if police action and the repressive policy measures adopted by the government since 2001 have been effective in reducing the intensity of violence. Third, we investigate whether the level of violence has had an effect on the stock market index in the Basque Country. The results, based on daily data from 1 July 2001 to 15 November 2005, suggest that the only effective measure to reduce violence was the banning of Herri Batasuna (HB), the radical party close to ETA supporters. Moreover, there was a decrease in the stock market index as a consequence of the violence in the area during the period under analysis.