Author(s)

Qingrun Chen

Corresponding Author

Qingrun Chen

Abstract

Non-traditional security factors have increasingly become an essential threat to the economic development of modern countries. For those countries where terrorism is rampant, how to make full use of fiscal and monetary policies, alleviate the negative impact of terrorism, and strengthen the national economy's ability to resist terrorism is a severe challenge for policymakers. The Easter terrorist attacks in 2019 have dealt a heavy blow to Sri Lanka's tourism industry. How to use monetary policy to accelerate economic recovery has become the primary issue that the Central Bank of Sri Lanka needs to deal with. This paper innovatively uses the IS-MP model used by the Federal Reserve for decision-making analysis to analyze the economic situation of Sri Lanka since the terrorist attacks. It provides suggestions for the decision-making of the central bank and the government of Sri Lanka. This study has positive significance in promoting the economic recovery and development of Sri Lanka. Furthermore, it has reference value for other countries threatened by terrorism in South Asia, such as India, Pakistan, and Afghanistan, to explore how to alleviate the negative impact of terrorism and has positive significance for regional economic development.

Keywords

Monetary policy; IS-MP model; terrorism; economic recovery