What Happened to Kobe? A Reassessment of the Impact of the 1995 Earthquake in Japan
AbstractThe received wisdom is that the devastation wrought by the 1995 Kobe earthquake did not have any long-term impact on the Japanese economy, nor much impact on Kobe itself. We re-evaluate the evidence using a new methodology, synthetic control, and find a persistent and still continuing adverse impact of the quake on the economy of Kobe more than 15 years after the event. Using the methodology developed by Abadie et al. (2010), we construct counter-factual dynamics for the Kobe economy. We identify a decline in per capita GDP that is attributable to the quake and is persistent, long-term, and clearly observable even 15 years after the quake. GDP per capita in 2007 was 500,000 yen per person lower (13% decrease) than it would have been had the earthquake not occurred. Importantly, this adverse long-term impact is identified in a wealthy region of a developed country, and with the backing of a deep-pocketed fiscal authority.
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Bibliographic InfoPaper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 201204.
Length: 25 pages
Date of creation: 19 Mar 2012
Date of revision:
Other versions of this item:
- duPont IV, William & Noy, Ilan, 2012. "What happened to Kobe? A reassessment of the impact of the 1995 earthquake in Japan," Working Paper Series 2087, Victoria University of Wellington, School of Economics and Finance.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-03 (All new papers)
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