1、Congressional Research Service The Library of CongressCRS Report for CongressReceived through the CRS WebOrder Code RS21076November 27, 2001The Economic Effects of Spending onHomeland SecurityBrian W. CashellSpecialist in Quantitative EconomicsGovernment and Finance DivisionSummaryAs a result of the
2、 terrorist attacks of September 11 the cost of domestic security hasrisen. The only straightforward way to measure the cost of “security” is to add up theexpenditures for labor and capital that are devoted to the provision of security. In thecase of air travel, security services paid for by the airl
3、ines are an intermediate good; thatis, they are an input to the production of air travel rather than output, and are notcounted separately in gross domestic product (GDP). The money spent on security isa cost of production and so would be reflected mainly in the price index for air travel,and in ove
4、rall price indexes to the extent that air travel contributes to total production.Because of the increase in labor and capital required to produce a safe trip, theproductivity of airlines would also suffer a one-time decline. The same is true forsecurity expenditures by any firm engaged in the produc
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