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Natural Disasters and Regional Development - The Case of Earthquakes

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  • Marius Fabian
  • Christian Lessmann
  • Tim Sofke

Abstract

We analyze the impact of earthquakes on nighttime lights at a sub-national level, i.e. on grids of different size. We argue that existing studies on the impact of natural disasters on economic development have several important limitations, both at the level of the outcome variable – usually national income or growth – as well as on the level of the independent variable, e.g. the timing of an event and the measuring of its intensity. We aim to overcome these limitations by using geophysical event data on earthquakes together with satellite nighttime lights. Using panel fixed effects regressions covering the entire world for the period 1992-2013 we find that earthquakes reduce both light growth rates and light levels significantly. The effects are persistent for approximately 5 years, but we find no long run effects. The effects are strong and robust in a small grid and gets weaker the larger the unit of observation. National institutions and economic conditions are relevant mediating factors.

Suggested Citation

  • Marius Fabian & Christian Lessmann & Tim Sofke, 2019. "Natural Disasters and Regional Development - The Case of Earthquakes," CESifo Working Paper Series 7511, CESifo.
  • Handle: RePEc:ces:ceswps:_7511
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    References listed on IDEAS

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    1. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    2. Felbermayr, Gabriel & Gröschl, Jasmin, 2013. "Natural disasters and the effect of trade on income: A new panel IV approach," European Economic Review, Elsevier, vol. 58(C), pages 18-30.
    3. Barone, Guglielmo & Mocetti, Sauro, 2014. "Natural disasters, growth and institutions: A tale of two earthquakes," Journal of Urban Economics, Elsevier, vol. 84(C), pages 52-66.
    4. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1549-1561, December.
    5. Felbermayr, Gabriel & Gröschl, Jasmin & Sanders, Mark & Schippers, Vincent & Steinwachs, Thomas, 2018. "Shedding Light on the Spatial Diffusion of Disasters," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181556, Verein für Socialpolitik / German Economic Association.
    6. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.
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    Cited by:

    1. Richard S.J. Tol, 2021. "State capacity and vulnerability to natural disasters," Working Paper Series 0721, Department of Economics, University of Sussex Business School.

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    More about this item

    Keywords

    natural disasters; earthquakes; event data; satellite nighttime lights; luminosity; grid data; institutions; growth; development;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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