National Economic Impact Analysis of Terrorist Attacks and Natural Disasters
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National Economic Impact Analysis of Terrorist Attacks and Natural Disasters

Edited by Harry W. Richardson, Jiyoung Park, James E. Moore II and Qisheng Pan

This book develops a national economic impact model to estimate the effects of simulated terrorist attacks and natural disasters on individual US States and economic sectors. The model, called NIEMO (The National Interstate Economic Model) looks at interindustry relationships and interregional trade. It is highly disaggregated making the model very accurate. The authors examine potential attack targets including theme parks, sporting events, bridges and tunnels in the national highway system as well as attempts to shoot down airplanes or spread foot-and-mouth disease. Covered natural disasters are almost all real world: Hurricane Katrina, the Joplin Tornado, the Gulf Oil Spill and Hurricane Sandy. The effects on State economies caused by the closing international borders in response to a global pandemic is also examined.
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Chapter 2: National Interstate Economic Model (NIEMO)

JiYoung Park and Harry W. Richardson


Many economists and planners are interested in evaluating the socioeconomic impacts of various disruptions. Occasionally, they use geographically detailed input-output (IO) models. Isard demonstrated as early as 1951 that traditional (national) IO models are inadequate because they cannot capture the effects of linkages and interactions among regions. To examine the full (short-term) impacts of unexpected events, such as terrorist attacks or natural disasters on the US economy, the economic links among states should be considered. Multiregional input-output models (MRIOs) include interregional trade tables and avoid some of the problems associated with excessive aggregation. Building an operational MRIO for all the states of the United States, however, requires highly detailed interstate shipments data. Although Chenery (1953) and Moses (1955) had formulated relatively simplified MRIO frameworks in response to the earlier discussions by Isard (1951), data problems persisted and have stymied most applications. The non-existence or rarity of useful interregional trade data is the most problematic issue. Intraregional and interregional data must be comparable and compatible, yet the currently available shipments data between states are only sporadically available and difficult to use.

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