IDEAS home Printed from https://ideas.repec.org/p/idb/brikps/13084.html
   My bibliography  Save this paper

The Impact of Tropical Storms on International Trade: Evidence from Eastern Caribbean Small Island Developing States

Author

Listed:
  • Mohan, Preeya

Abstract

Eastern Caribbean Small Island Developing States (SIDS) have a high dependence on international trade for income, employment and poverty reduction given their extreme openness, small market size, narrow range of resources and productive capabilities and specialized economic structures, making them vulnerable to external shocks, the most frequent being tropical storms. The objective of this paper is to investigate the impact of tropical storms on international trade for eight Eastern Caribbean SIDS over the period 2000-2019, as well as the mediating role of the Real Effective Exchange Rate (REER). The results indicate that hurricanes have a more long-term impact on exports, reducing exports of goods by 20 percent in the month of a strike and up to three months thereafter, while the impact on imports was just as severe but more immediate, reducing imports of goods by 11 percent in the month of a strike. The mediation analysis suggests that the REER plays no mediating role in explaining the impact of tropical storm damage on exports and imports in the region.

Suggested Citation

  • Mohan, Preeya, 2023. "The Impact of Tropical Storms on International Trade: Evidence from Eastern Caribbean Small Island Developing States," IDB Publications (Working Papers) 13084, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:13084
    DOI: http://dx.doi.org/10.18235/0005123
    as

    Download full text from publisher

    File URL: https://publications.iadb.org/publications/english/document/The-Impact-of-Tropical-Storms-on-International-Trade-Evidence-from-Eastern-Caribbean-Small-Island-Developing-States.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.18235/0005123?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Acharya, Avidit & Blackwell, Matthew & Sen, Maya, 2016. "Explaining Causal Findings Without Bias: Detecting and Assessing Direct Effects," American Political Science Review, Cambridge University Press, vol. 110(3), pages 512-529, August.
    2. A. S. Benetrix & P. R. Lane, 2013. "Fiscal Shocks and the Real Exchange Rate," International Journal of Central Banking, International Journal of Central Banking, vol. 9(3), pages 6-37, September.
    3. Hongwei Du & Zhen Zhu, 2001. "The effect of exchange-rate risk on exports: Some additional empirical evidence," Journal of Economic Studies, Emerald Group Publishing, vol. 28(2), pages 106-121, January.
    4. Charlotte Benson & Edward J. Clay, 2004. "Understanding the Economic and Financial Impacts of Natural Disasters," World Bank Publications - Books, The World Bank Group, number 15025, December.
    5. Kerry Emanuel, 2005. "Increasing destructiveness of tropical cyclones over the past 30 years," Nature, Nature, vol. 436(7051), pages 686-688, August.
    6. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
    7. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, vol. 84(1), pages 155-187, September.
    8. Andrade da Silva, Jorge & Cernat, Lucian, 2012. "Coping with loss: the impact of natural disasters on developing countries' trade flows," DG TRADE Chief Economist Notes 2012-1, Directorate General for Trade, European Commission.
    9. Auffret, Philippe, 2003. "High consumption volatility : the impact of natural disasters?," Policy Research Working Paper Series 2962, The World Bank.
    10. Eric Strobl & Sandrine Kablan, 2017. "How do natural disasters impact the exchange rate: an investigation through small island developing states (SIDS)?," Economics Bulletin, AccessEcon, vol. 37(3), pages 2274-2281.
    11. Martin Heger & Alex Julca & Oliver Paddison, 2008. "Analysing the Impact of Natural Hazards in Small Economies: The Caribbean Case," WIDER Working Paper Series RP2008-25, World Institute for Development Economic Research (UNU-WIDER).
    12. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    13. Chang Hoon Oh, 2017. "How do natural and man-made disasters affect international trade? A country-level and industry-level analysis," Journal of Risk Research, Taylor & Francis Journals, vol. 20(2), pages 195-217, February.
    14. Albala-Bertrand, J. M., 1993. "Natural disaster situations and growth: A macroeconomic model for sudden disaster impacts," World Development, Elsevier, vol. 21(9), pages 1417-1434, September.
    15. Ernesto R. Gantman & Marcelo P. Dabós, 2018. "Does trade openness influence the real effective exchange rate? New evidence from panel time-series," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 91-113, March.
    16. Preeya S. Mohan, 2022. "Implementing nationally determined contributions under the Paris agreement: an assessment of climate finance in Caribbean small island developing states," Climate Policy, Taylor & Francis Journals, vol. 22(9-10), pages 1281-1289, November.
    17. Mr. Tobias N. Rasmussen, 2004. "Macroeconomic Implications of Natural Disasters in the Caribbean," IMF Working Papers 2004/224, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Preeya S. Mohan, 2023. "The Impact of Tropical Storms on International Trade: Evidence from Eastern Caribbean Small Island Developing States," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 179-208, July.
    2. Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, vol. 40(7), pages 1317-1336.
    3. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    4. Berlemann, Michael, 2015. "Hurricane Risk, Happiness and Life Satisfaction. Some Empirical Evidence on the Indirect Effects of Natural Disasters," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113073, Verein für Socialpolitik / German Economic Association.
    5. Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," Research Department Publications 4649, Inter-American Development Bank, Research Department.
    6. Ercio Muñoz S. & Alfredo Pistelli M., 2010. "¿Tienen los Terremotos un Impacto Inflacionario en el Corto Plazo? Evidencia para una Muestra de Países," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 13(2), pages 113-127, April.
    7. Mohan, Preeya S. & Ouattara, Bazoumana & Strobl, Eric, 2018. "Decomposing the Macroeconomic Effects of Natural Disasters: A National Income Accounting Perspective," Ecological Economics, Elsevier, vol. 146(C), pages 1-9.
    8. Joseph, Iverson-Love, 2022. "The effect of natural disaster on economic growth: Evidence from a major earthquake in Haiti," World Development, Elsevier, vol. 159(C).
    9. Daniel Osberghaus, 2019. "The Effects of Natural Disasters and Weather Variations on International Trade and Financial Flows: a Review of the Empirical Literature," Economics of Disasters and Climate Change, Springer, vol. 3(3), pages 305-325, October.
    10. I. Koetsier, 2017. "The fiscal impact of natural disasters," Working Papers 17-17, Utrecht School of Economics.
    11. Noy, Ilan & Vu, Tam Bang, 2010. "The economics of natural disasters in a developing country: The case of Vietnam," Journal of Asian Economics, Elsevier, vol. 21(4), pages 345-354, August.
    12. Yanos Zylberberg, 2010. "Natural natural disasters and economic disruption," PSE Working Papers halshs-00564946, HAL.
    13. Brei, Michael & Mohan, Preeya & Strobl, Eric, 2019. "The impact of natural disasters on the banking sector: Evidence from hurricane strikes in the Caribbean," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 232-239.
    14. Carmen Camacho & Yu Sun, 2017. "Longterm decision making under the threat of earthquakes," Working Papers halshs-01670507, HAL.
    15. Naqvi, Asjad, 2017. "Deep Impact: Geo-Simulations as a Policy Toolkit for Natural Disasters," World Development, Elsevier, vol. 99(C), pages 395-418.
    16. Lisa Doyle & Ilan Noy, 2015. "The short-run nationwide macroeconomic effects of the Canterbury earthquakes," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(2), pages 134-156, August.
    17. Yanos Zylberberg, 2010. "Natural natural disasters and economic disruption," Working Papers halshs-00564946, HAL.
    18. Naguib, Costanza & Pelli, Martino & Poirier, David & Tschopp, Jeanne, 2022. "The impact of cyclones on local economic growth: Evidence from local projections," Economics Letters, Elsevier, vol. 220(C).
    19. Parag Mahajan & Dean Yang, 2020. "Taken by Storm: Hurricanes, Migrant Networks, and US Immigration," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 250-277, April.
    20. Felix L. Friedt, 2021. "Natural disasters, aggregate trade resilience, and local disruptions: Evidence from Hurricane Katrina," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1081-1120, November.

    More about this item

    Keywords

    natural disasters; Hurricanes; International trade; Small Island Developing States; Caribbean;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:brikps:13084. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Felipe Herrera Library (email available below). General contact details of provider: https://edirc.repec.org/data/iadbbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.