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Do Natural Disasters Have Long-term Effects on Growth?

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  • Christian R. Jaramillo H.

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Abstract

Large natural disasters (LNDs) are ubiquitous phenomena with potentially large impacts on the infrastructure and population of countries and on their economic activity in general. Using a panel of 113 countries and 36 years of data, I examine the relationship between different measures of natural disaster impact and long-run economic growth. The sample is partitioned in two separate ways: according to the amount and type of disasters that countries have experienced and to the size of those disasters. For each partition, I present two sets of econometric estimations. The first regressions identify short-run and longer-lasting effects of LNDs. However, these first estimations do not distinguish between temporary but persistent effects and truly permanent ones. I thus estimate a structural model that allows me to identify permanent changes. The results of the first regressions show that for some of the groups of countries the disaster impact persists beyond the 2-5 years in which reconstruction and adaptation are expected to have an effect on the economy. However, the estimates using the structural model show that only for a very small number of countries which share a history of highly devastating natural disasters the negative effects are truly permanent.

Suggested Citation

  • Christian R. Jaramillo H., 2009. "Do Natural Disasters Have Long-term Effects on Growth?," DOCUMENTOS CEDE 006647, UNIVERSIDAD DE LOS ANDES-CEDE.
  • Handle: RePEc:col:000089:006647
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    File URL: http://economia.uniandes.edu.co/publicaciones/dcede2009-24.pdf
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Do Natural Disasters Have Long-term Effects on Growth?
      by Ariel Goldring in Free Market Mojo on 2010-02-16 12:40:52

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    Cited by:

    1. Ercio Muñoz S. & Alfredo Pistelli M., 2010. "¿Tienen los Terremotos un Impacto Inflacionario en el Corto Plazo? Evidencia para una Muestra de Países," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 13(2), pages 113-127, April.
    2. van Bergeijk, P.A.G. & Lazzaroni, S., 2013. "Macroeconomics of natural disasters," ISS Working Papers - General Series 50075, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    4. Wenzel, Lars & Wolf, André, 2013. "Protection against major catastrophes: An economic perspective," HWWI Research Papers 137, Hamburg Institute of International Economics (HWWI).
    5. Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," Research Department Publications 4649, Inter-American Development Bank, Research Department.
    6. Ulph, David & Selvaretnam, Geethanjali & Thampanishvong, Kannika, 2012. "Saving and Re-building Lives: an Analysis of the Determinants of Disaster Relief," SIRE Discussion Papers 2012-47, Scottish Institute for Research in Economics (SIRE).
    7. Zeb Aurangzeb & Thanasis Stengos, 2012. "Economic Policies and the Impact of Natural Disasters on Economic Growth: A Threshold Regression Approach," Economics Bulletin, AccessEcon, vol. 32(1), pages 229-241.
    8. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers dp-12-28, Resources For the Future.
    9. Hallegatte,Stephane & Bangalore,Mook & Jouanjean,Marie Agnes, 2016. "Higher losses and slower development in the absence of disaster risk management investments," Policy Research Working Paper Series 7632, The World Bank.
    10. repec:ecr:col070:42007 is not listed on IDEAS
    11. Michael Berlemann & Daniela Wenzel, 2016. "Long-term Growth Effects of Natural Disasters - Empirical Evidence for Droughts," Economics Bulletin, AccessEcon, vol. 36(1), pages 464-476.
    12. Stéphane Hallegatte, 2012. "Modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs," Post-Print hal-00802050, HAL.
    13. Eduardo Cavallo & Ilan Noy, 2010. "The Aftermath of Natural Disasters: Beyond Destruction," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(2), pages 25-35, July.
    14. repec:jed:journl:v:42:y:2017:i:3:p:89-109 is not listed on IDEAS
    15. -, 2010. "The economics of climate change in Central America: summary 2010," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 35229, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. De Alwis, Diana, 2018. "Distributional impacts of disaster recovery: Sri Lankan households a decade after the 2004 Indian Ocean tsunami," Working Paper Series 6980, Victoria University of Wellington, School of Economics and Finance.

    More about this item

    Keywords

    Natural disasters; catastrophes; hurricanes; earthquakes; growth; panel data.;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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