Catastrophic Natural Disasters and Economic Growth

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper may be freely reproduced provided credit is given to the Inter-American Development Bank. Terms of use: Documents in 2010Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herrera Library Abstract 1This paper examines the short and long-run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. The counterfactual of the cases studied is assessed by constructing synthetic control groups, taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event. It is found that only extremely large disasters have a negative effect on output, both in the short and long run. However, this result appears in two events where radical political revolutions followed the natural disasters. Once these political changes are controlled for, even extremely large disasters do not display any significant effect on economic growth. It is also found that smaller, but still very large natural disasters, have no discernible effect on output.JEL Classification: O40, O47

Does a Value‐added Tax Increase Economic Efficiency?

“…Next, I follow Cavallo et al () and aggregate the country‐specific treatment effects into four groups based on income classification of the country during the year of VAT adoption. I normalize the estimates before aggregating them by setting the GDP per worker of each treated country equal to one in the treatment year.…”

How Do Supply Chain Networks Affect the Resilience of Firms to Natural Disasters? Evidence From the Great East Japan Earthquake

“…Fourth, the results of this study can also contribute to the literature on the long‐term economic impacts of natural disasters, which has yielded mixed findings. Skidmore and Toya () found no negative effect from natural disasters on long‐term growth, whereas Cavallo et al (), duPont IV and Noy (), and Noy and Nualsri () found a persistent negative effect. Xiao () found a negligible effect from a flood in the United States on income in the long term but a long‐lasting negative effect on agricultural output.…”

Urban redevelopment and residential location choice: Evidence from a major earthquake in Japan

“…We now formally examine the mechanism of the observed spatial reorganization in the affected area by controlling for a body of confounding factors. To construct a credible control group, we adopt the SC method to test the impact of the earthquake using a comparative analysis, which was developed by Abadie and Gardeazabal () and Abadie, Diamond, and Hainmueller (), and later adopted by a stream of empirical studies, such as Cavallo, Galiani, Noy, and Pantano (), Barone and Mocetti (), and Ando (). The approach aims to construct an SC unit of a treated unit using the weighted average of a set of untreated donor units, after which the outcomes of the treated and the SC units are compared with evaluate the impact of the treatment.…”