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The effect of natural disaster on economic growth: Evidence from a major earthquake in Haiti

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  • Joseph, Iverson-Love

Abstract

We examine the average causal impact of the 2010 earthquake in Haiti on economic growth and recovery by conducting a disaggregated empirical analysis at the subnational level. To achieve this, we opt for a fixed effects difference-in-differences model and impulse response functions by using the earthquake’s intensity as the main exogenous variable and nighttime light data as a proxy for economic activity from 1992 to 2019. Results indicate a robust evidence that the earthquake caused a significant decrease in the country’s economic growth in the short-term. We also reveal that such declines in growth persited ten years after the disaster. Overall, estimates provide new insights on the short and long-run economic growth effects of major natural disasters. Therefore, our analysis of the effects of earthquake intensity on the growth of night lights is an important contribution to disaster economics. In the concluding reflections, the findings, implications, and avenues for future research are discussed.

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  • Joseph, Iverson-Love, 2022. "The effect of natural disaster on economic growth: Evidence from a major earthquake in Haiti," World Development, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:wdevel:v:159:y:2022:i:c:s0305750x22002431
    DOI: 10.1016/j.worlddev.2022.106053
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    More about this item

    Keywords

    Nighttime lights; Earthquake intensity; Economic activity; Difference-in-differences model; Impulse response functions;
    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
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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