Shake me the money!
AbstractDuring a natural disaster, the negative supply shock due to the destruction of productive capacity is counteracted by a positive demand shock due to public grants for assistance and reconstruction, positing an identification issue in empirical work. Focusing on the 2009 ’Aquilano’ earthquake in Italy as a case study, we take advantage of quantified measure of damages for 75,424 buildings to estimate the negative supply shock and of a law issued to allocate reconstruction grants, which resulted in a sharp, exogenous discontinuity in transfers and output behavior across neighboring municipalities to estimate the positive demand shock. Diff-in-diff analysis suggests that local output multipliers of reconstruction grants (net of marginal tax rebates) are below unity. Yet the size of the grants act as a public insurance scheme, preventing a fall in output.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Macroeconomics (CFM) in its series Discussion Papers with number 1418.
Length: 47 pages
Date of creation: Jul 2014
Date of revision:
Natural disasters; Fiscal multipliers; Mercalli scale;
Other versions of this item:
- Riccardo Trezzi & Francesco Porcelli, 2014. "Shake me the money!," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1419, Faculty of Economics, University of Cambridge.
- C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-08-02 (All new papers)
- NEP-EUR-2014-08-02 (Microeconomic European Issues)
- NEP-MAC-2014-08-02 (Macroeconomics)
- NEP-PBE-2014-08-02 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Emi Nakamura & J?n Steinsson, 2014.
"Fiscal Stimulus in a Monetary Union: Evidence from US Regions,"
American Economic Review, American Economic Association,
American Economic Association, vol. 104(3), pages 753-92, March.
- Emi Nakamura & Jón Steinsson, 2011. "Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions," NBER Working Papers 17391, National Bureau of Economic Research, Inc.
- Loayza, Norman & Olaberria, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2009.
"Natural disasters and growth - going beyond the averages,"
Policy Research Working Paper Series
4980, The World Bank.
- Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, Elsevier, vol. 40(7), pages 1317-1336.
- J. Vernon Henderson & Adam Storeygard & David N. Weil, 2009.
"Measuring Economic Growth from Outer Space,"
NBER Working Papers
15199, National Bureau of Economic Research, Inc.
- J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, American Economic Association, vol. 102(2), pages 994-1028, April.
- Michael Woodford, 2010.
"Simple Analytics of the Government Expenditure Multiplier,"
Discussion Papers, Columbia University, Department of Economics
0910-09, Columbia University, Department of Economics.
- Michael Woodford, 2011. "Simple Analytics of the Government Expenditure Multiplier," American Economic Journal: Macroeconomics, American Economic Association, American Economic Association, vol. 3(1), pages 1-35, January.
- Woodford, Michael, 2010. "Simple Analytics of the Government Expenditure Multiplier," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7704, C.E.P.R. Discussion Papers.
- Michael Woodford, 2010. "Simple Analytics of the Government Expenditure Multiplier," NBER Working Papers 15714, National Bureau of Economic Research, Inc.
- Noy, Ilan, 2009.
"The macroeconomic consequences of disasters,"
Journal of Development Economics, Elsevier,
Elsevier, vol. 88(2), pages 221-231, March.
- Ilan Noy, 2007. "The Macroeconomic Consequences of Disasters," Working Papers, University of Hawaii at Manoa, Department of Economics 200707, University of Hawaii at Manoa, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin Hannon).
If references are entirely missing, you can add them using this form.