The Impact of the Great East Japan Earthquake on Japan’s Economic Growth

Abstract

This study captures the impact of the Great East Japan Earthquake on real monthly gross regional product and is the first attempt to measure the indirect loss caused by this natural disaster. We estimate counterfactual monthly gross regional product (assuming that no disaster occurred) for three disaster-stricken prefectures: Iwate, Miyagi, and Fukushima. The differences between the actual data and the counterfactual data indicate indirect loss or gain. The results indicate a reduction in output followed by a gradual rise in reconstruction demand. As of December 2013, the three prefectures experienced total indirect gains of approximately 3 trillion yen (30 billion US dollars). The monthly gross regional product and methodology proposed in this study can help researchers and policymakers to estimate indirect loss or gain about 2 months after a natural disaster occurs.