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Fiscal and social costs of recovery programs for an earthquake disaster in northern Taiwan

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  • Huang, Michael C.
  • Hosoe, Nobuhiro

Abstract

We investigate the long-run disaster impact of an earthquake hitting northern Taiwan with a nuclear power plant shutdown and the costs and effectiveness of recovery programs using a dynamic computable general equilibrium model. We simulate the losses of capital and labor from the disaster with a nuclear power plant shutdown and then conduct policy experiments of the recovery of Taiwan’s three major industries by subsidizing their output or capital use. We find that the semiconductor and electronic equipment sectors could recover with the aid of subsidies. In contrast, the recovery of the chemical sector would be crucially dependent on the availability of nuclear power. This is because the chemical sector is heavily dependent on petroleum products as inputs and thus susceptible to fuel price rises, induced by a fuel demand increase following the shutdown of a nuclear power plant. The fiscal and welfare costs differ by type of subsidy and program duration. Capital-use subsidies would cost less than output subsidies. A longer recovery program duration would cost less by reducing the distortionary effects of the policy interventions.

Suggested Citation

  • Huang, Michael C. & Hosoe, Nobuhiro, 2017. "Fiscal and social costs of recovery programs for an earthquake disaster in northern Taiwan," Journal of Asian Economics, Elsevier, vol. 53(C), pages 1-17.
  • Handle: RePEc:eee:asieco:v:53:y:2017:i:c:p:1-17
    DOI: 10.1016/j.asieco.2017.10.001
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    References listed on IDEAS

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    1. Chen, Yen-Heng Henry, 2013. "Non-nuclear, low-carbon, or both? The case of Taiwan," Energy Economics, Elsevier, vol. 39(C), pages 53-65.
    2. Chow, Gregory & Lin, An-loh, 2002. "Accounting for Economic Growth in Taiwan and Mainland China: A Comparative Analysis," Journal of Comparative Economics, Elsevier, vol. 30(3), pages 507-530, September.
    3. Olaf Jonkeren & Georgios Giannopoulos, 2014. "Analysing Critical Infrastructure Failure With A Resilience Inoperability Input--Output Model," Economic Systems Research, Taylor & Francis Journals, vol. 26(1), pages 39-59, March.
    4. Nobuhiro Hosoe, 2014. "Japanese manufacturing facing post-Fukushima power crisis: a dynamic computable general equilibrium analysis with foreign direct investment," Applied Economics, Taylor & Francis Journals, vol. 46(17), pages 2010-2020, June.
    5. Michael C. Haung & Nobuhiro Hosoe, 2016. "Computable General Equilibrium Assessment Of A Compound Disaster In Northern Taiwan," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 28(2), pages 89-106, July.
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    Cited by:

    1. Yan Song & Zhenran Li & Xiao Zhang & Ming Zhang, 2021. "Study on indirect economic impacts and their causes of the 2008 Wenchuan earthquake," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 108(2), pages 1971-1995, September.
    2. Syed Tauseef Hassan & Enjun Xia & Chien-Chiang Lee, 2021. "Mitigation pathways impact of climate change and improving sustainable development: The roles of natural resources, income, and CO2 emission," Energy & Environment, , vol. 32(2), pages 338-363, March.
    3. Hajime Tanaka & Michael C Huang, 2021. "Impact assessment and a fiscal recovery policy for tsunami risk: GIS and the general equilibrium approach in Hakodate city, Japan," Environment and Planning B, , vol. 48(5), pages 1144-1160, June.

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    More about this item

    Keywords

    Earthquake disaster; Nuclear power shutdown; Taiwan; Recovery policy; Dynamic computable general equilibrium model;
    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
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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