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

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Author Info
Strobl, Eric () (Ecole Polytechnique, Paris)

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

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Date of creation: Jul 2008
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Handle: RePEc:iza:izadps:dp3619

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Related research
Keywords: US coastal counties; economic growth; hurricanes;

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E0 - Macroeconomics and Monetary Economics - - General

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  1. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September. [Downloadable!] (restricted)
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  3. 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). [Downloadable!]
  4. Strobl, Eric & Walsh, Frank, 2008. "The Re-Building Effect of Hurricanes: Evidence from Employment in the US Construction Industry," IZA Discussion Papers 3544, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Richard W. Evans & Yingyao Hu & Zhong Zhao, 2007. "The Fertility Effect of Catastrophe: U.S. Hurricane Births," IZA Discussion Papers 2975, Institute for the Study of Labor (IZA). [Downloadable!]
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  8. Ariel R. Belasen & Solomon W. Polachek, 2007. "How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida," IZA Discussion Papers 2976, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. John C. Bluedorn, 2005. "Hurricanes: Intertemporal Trade and Capital Shocks," Economics Papers 2005-W22, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
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  10. 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. [Downloadable!]
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  14. Toya, Hideki & Skidmore, Mark, 2007. "Economic development and the impacts of natural disasters," Economics Letters, Elsevier, vol. 94(1), pages 20-25, January. [Downloadable!] (restricted)
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  15. Horwich, George, 2000. "Economic Lessons of the Kobe Earthquake," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 521-42, April.
  16. Rappaport, Jordan & Sachs, Jeffrey D, 2003. " The United States as a Coastal Nation," Journal of Economic Growth, Springer, vol. 8(1), pages 5-46, March. [Downloadable!] (restricted)
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