Paper Title
Investor Confidence and Asymmetric Effects of Terrorism - A Case of Pakistan

Abstract
Foreign Direct Investment not only plugs in the gap between the domestic investments and saving, it is also the source for transfer of technology and productivity. The major reason for the flow of investment across borders is the difference in the rate of return. But the catch is that foreign investors are more risk averse as compared to the local investors, such that maintaining investor confidence is the key to retain stable inflow of capital and intellect. Investor confidence is sensitive to economic conditions especially like terrorism events which cause a break in investor confidence and capital flight. This study is empirically testing whether there is asymmetry in the effects of terrorism on FDI. And the results show that in very short run terrorism leads to increase in FDI, later on, it decreases the FDI and it is the time period where asymmetry between the effects of increasing FDI and decreasing FDI occurs. While in long run, the effect of an increase in terrorism and effect of a decrease in terrorism tend to become almost equal and opposite. This indicates that Pakistan needs to be patient as it will take more time regain investor confidence. Index Terms - Asymmetric effects ARDL, Investor Confidence, risk premium, political instability