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The Economic Growth Impact of Hurricanes: Evidence from US Coastal Counties

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  • Strobl, Eric

    ()

    (Ecole Polytechnique, Paris)

Abstract

We estimate the impact of hurricane strikes on local economic growth rates and how this is reflected in more aggregate growth patterns. To this end we assemble a panel data set of US coastal counties’ growth rates and construct a hurricane destruction index that is based on a monetary loss equation, local wind speed estimates derived from a physical wind field model, and local exposure characteristics. Our econometric results suggest that in response to a hurricane strike a county’s annual economic growth rate will initially fall by 0.8, but then partially recover by 0.2 percentage points. While the pattern is qualitatively similar at the state level, the net effect over the long term is negligible. Hurricane strikes do not appear to be economically important enough to be reflected in national economic growth rates.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3619.

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Length: 41 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3619
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Keywords: US coastal counties; economic growth; hurricanes;

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  • E0 - Macroeconomics and Monetary Economics - - General

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  1. Bruno, Giovanni S.F., 2005. "Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models," Economics Letters, Elsevier, vol. 87(3), pages 361-366, June.
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  8. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
  9. Eric Strobl & Frank Walsh, 2009. "The Re-Building Effect of Hurricanes: Evidence from Employment in the US Construction Industry," Working Papers hal-00393886, HAL.
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  13. John C. Bluedorn, 2005. "Hurricanes: Intertemporal Trade and Capital Shocks," Economics Papers 2005-W22, Economics Group, Nuffield College, University of Oxford.
  14. Richard Evans & Yingyao Hu & Zhong Zhao, 2010. "The fertility effect of catastrophe: U.S. hurricane births," Journal of Population Economics, Springer, vol. 23(1), pages 1-36, January.
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  17. repec:dgr:uvatin:20010006 is not listed on IDEAS
  18. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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Cited by:

  1. Yamamura, Eiji, 2011. "Public sector corruption and the probability of technological disasters," MPRA Paper 34833, University Library of Munich, Germany.
  2. Blake Sisk & Carl Bankston, 2014. "Hurricane Katrina, a Construction Boom, and a New Labor Force: Latino Immigrants and the New Orleans Construction Industry, 2000 and 2006–2010," Population Research and Policy Review, Springer, vol. 33(3), pages 309-334, June.
  3. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
  4. Vasco M. CARVALHO & NIREI Makoto & SAITO Yukiko, 2014. "Supply Chain Disruptions: Evidence from the Great East Japan Earthquake," Discussion papers 14035, Research Institute of Economy, Trade and Industry (RIETI).
  5. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
  6. Eiji Yamamura, 2012. "Death tolls from natural disasters: Influence of interactions among fiscal decentralization, institutions and economic development," EERI Research Paper Series EERI_RP_2012_08, Economics and Econometrics Research Institute (EERI), Brussels.
  7. Gabriel Felbermayr & Jasmin Gröschl, 2013. "Natürlich negativ: Der Wachstumseffekt von Naturkatastrophen," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(19), pages 16-22, October.
  8. Anthony Murphy & Eric Strobl, 2010. "The impact of hurricanes on housing prices: evidence from U.S. coastal cities," Working Papers 1009, Federal Reserve Bank of Dallas.
  9. Deryugina, Tatyana, 2011. "The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes," MPRA Paper 53307, University Library of Munich, Germany, revised 08 Aug 2013.
  10. Yamamura, Eiji, 2013. "Impact of natural disasters on income inequality: Analysis using panel data during the period 1965 to 2004," MPRA Paper 45623, University Library of Munich, Germany.
  11. Lazzaroni, S. & van Bergeijk, P.A.G., 2013. "Natural disasters impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," ISS Working Papers - General Series 554, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  12. Samuel Fankhauser & Thomas K. J. McDermott, 2014. "Understanding the adaptation deficit: why are poor countries more vulnerable to climate events than rich countries?," LSE Research Online Documents on Economics 57620, London School of Economics and Political Science, LSE Library.
  13. Alexander S. Skorobogatov, 2014. "An Ongoing Reversal Of Fortune Among Russian Cities: City Age, Natural Resources, And Changing Spatial Income Distribution," HSE Working papers WP BRP 60/EC/2014, National Research University Higher School of Economics.
  14. 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.
  15. 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.
  16. Ariel Belasen & Chifeng Dai, 2014. "When oceans attack: assessing the impact of hurricanes on localized taxable sales," The Annals of Regional Science, Springer, vol. 52(2), pages 325-342, March.
  17. Martina Kirchberger, 2014. "Natural Disasters and Labour Markets," Economics Series Working Papers WPS/2014-19, University of Oxford, Department of Economics.
  18. Guglielmo Barone & Sauro Mocetti, 2014. "Natural disasters, growth and institutions: a tale of two earthquakes," Temi di discussione (Economic working papers) 949, Bank of Italy, Economic Research and International Relations Area.

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