IDEAS home Printed from
   My bibliography  Save this article

Simulation Analysis of Macroeconomic Impact of Large Scale Earthquake in Tokyo (in Japanese)


  • Motohiro SATO
  • Kazumasa OGURO


The present paper considers a simple (Keynesian) macroeconomic model to quantify impacts of the large scale earthquake in Tokyo on national economy variables such as economic growth, price level, interest rate, fiscal balance by Monte Carlo simulations. In doing so, we account for the current situation of Japan public finance and society such as increasing public debt ratio to GDP and aging of the population. The simulations reveal that while GDP falls immediately after the disaster, there will be quick recovery restructuring projects boosting the economy. Overall, the impact of the earthquake on the economy seems to be limited. The reason behind this result is that our staged economy with society aging damps supply decline and increasing macro demand after the disaster with keeping GDP gap modest. It is noted however that the large scale earthquake increases probability that interest rate surges and government goes bankrupt with public debt being accumulated. The probability of the fiscal crisis in the year of 2020 is estimated to jump up from 12% without the earthquake to 43% in the scenario that it occurs in 2015. We also discuss ex ante preventive policies to mitigate detrimental effects of the disaster. They include captive, or fund for disaster relief and fiscal consolidation. These policies serve to mitigate the perverse effect of the earthquake on the economy.

Suggested Citation

  • Motohiro SATO & Kazumasa OGURO, 2011. "Simulation Analysis of Macroeconomic Impact of Large Scale Earthquake in Tokyo (in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 184, pages 122-139, January.
  • Handle: RePEc:esj:esriea:184f

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esj:esriea:184f. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (KAWAMOTO Takuma). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.