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Natural disasters and economic policy for the Pacific Rim

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  • Noy, Ilan

Abstract

I employ a typology of disaster impacts that distinguishes between direct and indirect damages. Direct damages are the damage to fixed assets and capital (including inventories), damages to raw materials and extractable natural resources, and of course mortality and morbidity that are a direct consequence of the natural phenomenon. Indirect damages refer to the economic activity, in particular the production of goods and services, that will not take place following the disaster and because of it. These indirect damages may be caused by the direct damages to physical infrastructure or harm to labor, or because reconstruction pulls resources away from the usual production practices. These indirect damages also include the additional costs that are incurred because of the need to use alternative and potentially inferior means of production and/or distribution for the provision of normal goods and services (Pelling et al., 2002).These costs can be accounted for in the aggregate by examining the overall performance of the economy, as measured through the most relevant macroeconomic variables, in particular GDP, the fiscal accounts, consumption, investment, and, especially important for the comparatively globalized countries of the Pacific Rim, the balance of trade and the balance of payments. These costs can also be further divided, following the standard distinction in macroeconomics, between the short run (up to several years) and the long run (typically considered to be at least five years, but sometimes also measured in decades). I use these distinctions in the discussion that follows.

Suggested Citation

  • Noy, Ilan, 2012. "Natural disasters and economic policy for the Pacific Rim," Working Paper Series 2088, Victoria University of Wellington, School of Economics and Finance.
  • Handle: RePEc:vuw:vuwecf:2088
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    File URL: http://researcharchive.vuw.ac.nz/handle/10063/2088
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    References listed on IDEAS

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    Cited by:

    1. Noy, I, 2012. "Investing in Disaster Risk Reduction: A Global Fund," Working Paper Series 2390, Victoria University of Wellington, School of Economics and Finance.

    More about this item

    Keywords

    Pacific Rim; natural disasters; economic policy; damages;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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