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Do natural disasters influence long-term saving?: Assessing the impact of the 2008 Sichuan earthquake on household saving rates using synthetic control

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  • Kevin Luo

    (Graduate School of Economics, Kobe University)

  • Tomoko Kinugasa

    (Graduate School of Economics, Kobe University)

Abstract

In this study, employing the synthetic control method (Abadie et al., 2003), we examine the short- and long-term effects of the 2008 Sichuan earthquake on saving behaviors. The results indicate that, in the short-run, the earthquake has caused drastic declines in household saving rates-from 24% to 7% and from 23% to 21% for rural and urban populations, respectively. However, household saving rates recovered to the baseline shortly after the shock, and they exactly match their counterfactual counterparts in the period ahead. The estimates imply that, at the aggregate level, the earthquake has no discernible long-run impact on the saving propensity of the affected population.

Suggested Citation

  • Kevin Luo & Tomoko Kinugasa, 2018. "Do natural disasters influence long-term saving?: Assessing the impact of the 2008 Sichuan earthquake on household saving rates using synthetic control," Discussion Papers 1804, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1804
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    2. Tian Xiong & Kaan Celebi & Paul J. J. Welfens, 2022. "OECD countries’ twin long-run challenge: The impact of aging dynamics and increasing natural disasters on savings ratios," International Economics and Economic Policy, Springer, vol. 19(4), pages 741-759, October.

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    More about this item

    Keywords

    Natural disaster; Sichuan earthquake; Saving; Synthetic control method; long-term impact;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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