The spectre of terrorism and the stock market

Terrorism is a major issue in the twenty-first century. In this paper, we examine the effect of terrorism on the stock market. We go beyond previous studies to explore the spectre of terrorism on the market rather than terrorist activities. Using a narrative-based approach á la Shiller (2019), we find that the spectre of terrorism during the Northern Ireland Troubles reduced returns and increased volatility in the UK stock market.