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Is There An Indispensable Role For Government During Recovery From An Earthquake? A Theoretical Elaboration

Author

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  • I. Hakan Yetkiner

Abstract

It is commonly argued that catastrophic effects of physical shocks are recovered consequentially due to internal adjustment mechanisms economies retain. The theoretical literature on growth implications of earthquakes relies on the same premise, by and large, putting relatively minor role on the shoulders of governments as an external source in recovering from catastrophic effects of an earthquake. This paper elaborates theoretically whether there is an indispensable role for government during recovery from the destructive effects of an earthquake. To this end, we employ a specific growth environment, namely AK framework, which imposes constant ratios on the quantities of the model from the start. It follows that, when a physical shock hits the economy, the model fails to restore these conditions automatically. The paper contributes to the literature in two ways. First, it shows that an indispensable role for government in restoring equilibrium after an earthquake is a theoretical possibility. Second, it advances our understanding on the procedure of restoring equilibrium when there are fixed ratios between quantities, an issue that is not known very much in the literature.

Suggested Citation

  • I. Hakan Yetkiner, 2003. "Is There An Indispensable Role For Government During Recovery From An Earthquake? A Theoretical Elaboration," Working Papers FNU-25, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
  • Handle: RePEc:sgc:wpaper:25
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    File URL: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/QuakePaper.pdf
    File Function: First version, 2003
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    More about this item

    Keywords

    Natural disasters; earthquakes; constancy conditions; economic growth;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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