Walter Enders & Todd Sandler
Using time-series procedures, we investigate whether transnational terrorism changed following 9/11 and the subsequent US-led war on terrorism. Perhaps surprising, little has changed to the time series of overall incidents and most of its component series. When 9/11 is prejudged as a break date, we find that logistically complex hostage-taking events have fallen as a proportion of all events, while logistically simple, but deadly, bombings have increased as a proportion of deadly incidents. These results hold when we apply the Bai-Perron procedure where structural breaks are data identified. This procedure locates earlier breaks in the mid-1970s and 1990s. Reasonable out-of-sample forecasts are possible if structural breaks are incorporated fairly rapidly into the model.