Abstract
Targeted killing (henceforth assassination) of members of Palestinian terrorist organizations was a major element in Israel's counterterrorism effort during the Palestinian uprising which started in 2000. We evaluate the effectiveness of this policy indirectly by examining Israeli stock market reactions to assassinations. Our approach relies on the assumption that the market should react positively to news of effective counterterrorism measures but negatively to news of counterproductive ones. The main result of the analysis is that the market reacts strongly to assassinations of senior members in Palestinian terrorist organizations: it declines following attempts to assassinate political leaders but rises following attempts to assassinate military ones.
Keywords: Counterterrorism, Stock Market
JEL Classifications: G14, H56