Does government decentralization reduce domestic terror? An empirical test Axel Dreher a Justina A. V. Fischer b November 2010 Abstract Using a country panel of domestic terror attacks from 1998 to 2004, we empirically analyze the impact of government decentralization on terror. Our results show that expenditure decentralization reduces domestic terror, while political decentralization has no impact. Keywords: Domestic Terrorism, Decentralization, Federalism, Autonomy JEL-Codes: D74; H70; H40, K40 a Georg-August University Goettingen, Platz der Goettinger Sieben 3, 37073 Goettingen, Germany, KOF Swiss Economic Institute, IZA and CESifo, mail@axel-dreher.de. b Stockholm School of Economics, Sweden, OECD, Paris, University of Hamburg, Germany, present address: German Institute for Economic Research (DIW Berlin), International Economics Department, Mohrenstr. 58, 10117 Berlin, Germany, JAVFischer@gmx.de.