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The Economic Growth Impact of Hurricanes: Evidence from US Coastal Counties

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  • Strobl, Eric

    ()
    (Ecole Polytechnique, Paris)

Abstract

We estimate the impact of hurricane strikes on local economic growth rates and how this is reflected in more aggregate growth patterns. To this end we assemble a panel data set of US coastal counties’ growth rates and construct a hurricane destruction index that is based on a monetary loss equation, local wind speed estimates derived from a physical wind field model, and local exposure characteristics. Our econometric results suggest that in response to a hurricane strike a county’s annual economic growth rate will initially fall by 0.8, but then partially recover by 0.2 percentage points. While the pattern is qualitatively similar at the state level, the net effect over the long term is negligible. Hurricane strikes do not appear to be economically important enough to be reflected in national economic growth rates.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3619.

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Length: 41 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3619

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Keywords: US coastal counties; economic growth; hurricanes;

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References

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  1. Eric Strobl & Frank Walsh, 2009. "The Re-Building Effect of Hurricanes: Evidence from Employment in the US Construction Industry," Working Papers hal-00393886, HAL.
  2. Matthew J. Higgins & Daniel Levy & Andrew T. Young, 2005. "Growth and Convergence across the U.S.: Evidence from County-level Data," Emory Economics, Department of Economics, Emory University (Atlanta) 0529, Department of Economics, Emory University (Atlanta).
  3. Ariel R. Belasen & Solomon W. Polachek, 2009. "How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
  4. Toya, Hideki & Skidmore, Mark, 2007. "Economic development and the impacts of natural disasters," Economics Letters, Elsevier, Elsevier, vol. 94(1), pages 20-25, January.
  5. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, Elsevier, vol. 92(1), pages 1-45, September.
  6. Rappaport, Jordan & Sachs, Jeffrey D, 2003. " The United States as a Coastal Nation," Journal of Economic Growth, Springer, Springer, vol. 8(1), pages 5-46, March.
  7. Maurice J.G. Bun & Jan F. Kiviet, 2001. "The Accuracy of Inference in Small Samples of Dynamic Panel Data Models," Tinbergen Institute Discussion Papers 01-006/4, Tinbergen Institute.
  8. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, Elsevier, vol. 65(1), pages 9-15, October.
  9. Giovanni S.F. Bruno, 2004. "Approximating the Bias of the LSDV Estimator for Dynamic Unbalanced Panel Data Models," KITeS Working Papers, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy 159, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2004.
  10. Belasen, Ariel R. & Polachek, Solomon, 2008. "How Hurricanes Affect Employment and Wages in Local Labor Markets," IZA Discussion Papers 3407, Institute for the Study of Labor (IZA).
  11. John C. Bluedorn, 2005. "Hurricanes: Intertemporal Trade and Capital Shocks," Economics Series Working Papers 241, University of Oxford, Department of Economics.
  12. 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.
  13. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, Econometric Society, vol. 49(6), pages 1417-26, November.
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  17. Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
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Citations

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Cited by:
  1. Gabriel J. Felbermayr & Jasmin Gröschl, 2013. "Naturally Negative: The Growth Effects of Natural Disasters," CESifo Working Paper Series 4439, CESifo Group Munich.
  2. Deryugina, Tatyana, 2011. "The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes," MPRA Paper 53307, University Library of Munich, Germany, revised 08 Aug 2013.
  3. Lazzaroni, S. & van Bergeijk, P.A.G., 2013. "Natural disasters impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," ISS Working Papers - General Series, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague 554, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  4. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers, Resources For the Future dp-12-28, Resources For the Future.
  5. Blake Sisk & Carl Bankston, 2014. "Hurricane Katrina, a Construction Boom, and a New Labor Force: Latino Immigrants and the New Orleans Construction Industry, 2000 and 2006–2010," Population Research and Policy Review, Springer, Springer, vol. 33(3), pages 309-334, June.
  6. Ariel Belasen & Chifeng Dai, 2014. "When oceans attack: assessing the impact of hurricanes on localized taxable sales," The Annals of Regional Science, Springer, Springer, vol. 52(2), pages 325-342, March.
  7. Guglielmo Barone & Sauro Mocetti, 2014. "Natural disasters, growth and institutions: a tale of two earthquakes," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 949, Bank of Italy, Economic Research and International Relations Area.
  8. Yamamura, Eiji, 2011. "Public sector corruption and the probability of technological disasters," MPRA Paper 34833, University Library of Munich, Germany.
  9. Alexander S. Skorobogatov, 2014. "An Ongoing Reversal Of Fortune Among Russian Cities: City Age, Natural Resources, And Changing Spatial Income Distribution," HSE Working papers, National Research University Higher School of Economics WP BRP 60/EC/2014, National Research University Higher School of Economics.
  10. Yamamura, Eiji, 2013. "Impact of natural disasters on income inequality: Analysis using panel data during the period 1965 to 2004," MPRA Paper 45623, University Library of Munich, Germany.
  11. Vasco M. CARVALHO & NIREI Makoto & SAITO Yukiko, 2014. "Supply Chain Disruptions: Evidence from the Great East Japan Earthquake," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 14035, Research Institute of Economy, Trade and Industry (RIETI).
  12. Gabriel Felbermayr & Jasmin Gröschl, 2013. "Natürlich negativ: Der Wachstumseffekt von Naturkatastrophen," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(19), pages 16-22, October.
  13. van Bergeijk, P.A.G. & Lazzaroni, S., 2013. "Macroeconomics of natural disasters," ISS Working Papers - General Series, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague 50075, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  14. Anthony Murphy & Eric Strobl, 2010. "The impact of hurricanes on housing prices: evidence from U.S. coastal cities," Working Papers, Federal Reserve Bank of Dallas 1009, Federal Reserve Bank of Dallas.
  15. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.

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