Catastrophic Natural Disasters and Economic Growth

By Eduardo A. Cavallo, Sebastian Galiani, Ilan Noy, Juan Cruz Pantano. Review of Economics and Statistics, 2010

1,174 citations recorded by the source corpus.

Abstract We examine the average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. For each country affected by a large disaster, we compute the counterfactual by constructing synthetic controls. We find that only extremely large disasters have a negative effect on output in both the short and the long runs. However, we also show that this results from two events where radical political revolutions followed the disasters. Once we control for these political changes, even extremely large disasters do not display any significant effect on economic growth.

Subfields: Economics and Econometrics, Sociology and Political Science, Soil Science

View Paper: https://www.semanticscholar.org/paper/2abca581acdfc1ee44ed24b072d2dbb2b58c1ffc

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Citations in the corpus

COVID-19 and finance: Agendas for future research (2020, neutral): “But is the problem too big?(3) Cavallo et al. (2013) find that only extremely large disasters have a negative effect on output in both the short and the long runs. However, they note that their results stem from a few cases where radical political revolutions followed the disasters. How much of COVI”
Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options (2012, neutral): “A working paper from the Inter-American Development Bank finds no discernible impact of natural disasters on economic growth in both the short and long run (Cavallo et al. 2010).”
Pooling Multiple Case Studies Using Synthetic Controls: An Application to Minimum Wage Policies (2015, background): “Cavallo et al. (2013) use synthetic controls to calculate the mean effect of multiple country-specific natural disasters on GDP per capita. With randomization inference on the mean effect, the authors show that there is a statistically significant fall in GDP for the group of the four most fatal dis”
The effect of natural disasters on economic activity in US counties: A century of data (2020, neutral): “Contrary to recent cross-country studies like Cavallo et al. (2013) and Kocornik-Mina et”
The economic consequences of Hugo Chavez: A synthetic control analysis (2016, methodology): “And of course the synthetic control method has seen numerous recent applications including affirmative action (Hinrichs, 2012), compulsory voting (Fowler, 2013), economic liberalization (Billmeier and Nannicini, 2013), and natural disasters Cavallo et al. (2013).”
Hurricane Iniki: measuring the long-term economic impact of a natural disaster using synthetic control (2011, methodology): “This placebo-effects methodology is described in more detail and also extended to multiple treated cases in Cavallo et al. (2010a).”
Synthetic Control Method: Inference, Sensitivity Analysis and Confidence Sets (2018, background): “Finally, Acemoglu et al. (2013), Cavallo et al. (2013) and Dube & Zipperer (2013) develop different ways to apply SCM when there are more than one treated unit and propose tests that are similar to the ones proposed by Abadie et al. (2010) and Abadie et al. (2015).”
The impact of climate vulnerability on firms’ cost of capital and access to finance (2021, background): “The direct link between catastrophic natural disasters and economic growth is empirically established (Cavallo et al., 2013).”
Unmitigated Disasters? New Evidence on the Macroeconomic Cost of Natural Catastrophes (2012, methodology): “Cavallo et al. 2010). The papers closest to ours are Noy (2009), Hochrainer (2009) and Loayza et al. (2012); all combine CRED data with World Bank statistics and include more macroeconomic covariates, at the expense of sample size.”
Borrowers under water! Rare disasters, regional banks, and recovery lending (2020, background): “, 2010); destroy the capital stock of entire regions (Odell and Weidenmier, 2004); depress investment employment, and consumption growth (Vigdor, 2008; Strobl, 2011); and slow down economic growth over the long term (Cavallo et al., 2013; McDermott et al., 2014).”