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Do Natural Disasters Have Long-term Effects on Growth?

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  • Christian R. Jaramillo H.

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Abstract

Large natural disasters (LNDs) are ubiquitous phenomena with potentially large impacts on the infrastructure and population of countries and on their economic activity in general. Using a panel of 113 countries and 36 years of data, I examine the relationship between different measures of natural disaster impact and long-run economic growth. The sample is partitioned in two separate ways: according to the amount and type of disasters that countries have experienced and to the size of those disasters. For each partition, I present two sets of econometric estimations. The first regressions identify short-run and longer-lasting effects of LNDs. However, these first estimations do not distinguish between temporary but persistent effects and truly permanent ones. I thus estimate a structural model that allows me to identify permanent changes. The results of the first regressions show that for some of the groups of countries the disaster impact persists beyond the 2-5 years in which reconstruction and adaptation are expected to have an effect on the economy. However, the estimates using the structural model show that only for a very small number of countries which share a history of highly devastating natural disasters the negative effects are truly permanent.

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Bibliographic Info

Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 006647.

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Length: 44
Date of creation: 01 Nov 2009
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Handle: RePEc:col:000089:006647

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  1. Christian R. Jaramillo H., 2007. "Natural disasters and growth: evidence using a wide panel of countries," DOCUMENTOS CEDE 003927, UNIVERSIDAD DE LOS ANDES-CEDE.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Do Natural Disasters Have Long-term Effects on Growth?
    by Ariel Goldring in Free Market Mojo on 2010-02-16 06:40:52
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Cited by:
  1. Eduardo Cavallo & Ilan Noy, 2010. "The Aftermath of Natural Disasters: Beyond Destruction," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(2), pages 25-35, 07.
  2. Hallegatte, Stephane, 2012. "Modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs," Policy Research Working Paper Series 6047, The World Bank.
  3. Wenzel, Lars & Wolf, André, 2013. "Protection against major catastrophes: An economic perspective," HWWI Research Papers 137, Hamburg Institute of International Economics (HWWI).
  4. Zeb Aurangzeb & Thanasis Stengos, 2012. "Economic Policies and the Impact of Natural Disasters on Economic Growth: A Threshold Regression Approach," Economics Bulletin, AccessEcon, vol. 32(1), pages 229-241.
  5. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers dp-12-28, Resources For the Future.
  6. Geethanjali Selvaretnam & Kannika Thampanishvong & David Ulph, . "Saving and Re-building Lives: an Analysis of the Determinants of Disaster Relief," CRIEFF Discussion Papers 1202, Centre for Research into Industry, Enterprise, Finance and the Firm.
  7. Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters - A Survey," Working Papers 200919, University of Hawaii at Manoa, Department of Economics.

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