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Long-term Growth Effects of Natural Disasters - Empirical Evidence for Droughts

Author

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  • Michael Berlemann
  • Daniela Wenzel

Abstract

The ongoing process of climate change goes along with a higher frequency and/or severity of droughts. While the short-term growth consequences of droughts are comparatively well examined, little research has yet been devoted to the question whether and how droughts affect medium and long-term growth. However, knowledge on the growth dynamics triggered by natural disasters is an influential input factor for integrated assessment models which are used to evaluate climate policy measures. In this paper we deliver empirical support for the hypothesis of the existence of long-run growth effects of droughts. Based on a panel of 153 countries over the period of 1960 to 2002 and employing a truly exogenous drought indicator derived from rainfall data we find significantly negative long-term growth effects of droughts in both highly and less developed countries. We also deliver first empirical evidence on the channels through which droughts affect economic growth.

Suggested Citation

  • Michael Berlemann & Daniela Wenzel, 2015. "Long-term Growth Effects of Natural Disasters - Empirical Evidence for Droughts," CESifo Working Paper Series 5598, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5598
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Berlemann, Michael, 2016. "Does hurricane risk affect individual well-being? Empirical evidence on the indirect effects of natural disasters," Ecological Economics, Elsevier, vol. 124(C), pages 99-113.
    2. Michael Berlemann & Daniela Wenzel, 2018. "Precipitation and Economic Growth," CESifo Working Paper Series 7258, CESifo Group Munich.
    3. Michael Berlemann & Daniela Wenzel, 2016. "Hurricanes, Economic Growth and Transmission Channels - Empirical Evidence for Developed and Underdeveloped Countries," CESifo Working Paper Series 6041, CESifo Group Munich.
    4. repec:eee:wdevel:v:105:y:2018:i:c:p:231-247 is not listed on IDEAS
    5. repec:jed:journl:v:42:y:2017:i:3:p:89-109 is not listed on IDEAS

    More about this item

    Keywords

    climate change; natural disasters; droughts; economic growth; transmission channels;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid

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