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 deeppocketed fiscal authority.
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Bibliographic InfoPaper provided by Victoria University of Wellington, School of Economics and Finance in its series Working Paper Series with number 2087.
Date of creation: 2012
Date of revision:
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Postal: Alice Fong, Administrator, School of Economics and Finance, Victoria Business School, Victoria University of Wellington, PO Box 600 Wellington, New Zealand
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Web page: http://www.victoria.ac.nz/sef
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Natural disaster; earthquake; Kobe; Great Hanshin; long‐run impact;
Other versions of this item:
- William DuPont & Ilan Noy, 2012. "What Happened to Kobe? A Reassessment of the Impact of the 1995 Earthquake in Japan," Working Papers 201204, University of Hawaii at Manoa, Department of Economics.
- 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-2012-04-23 (All new papers)
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- Hiroshi Fujiki & Cheng Hsiao, 2013. "Disentangling the Effects of Multiple Treatments -Measuring the Net Economic Impact of the 1995 Great Hanshin-Awaji Earthquake," IMES Discussion Paper Series 13-E-03, Institute for Monetary and Economic Studies, Bank of Japan.
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