Fomby, ThomasIkeda, YukiLoayza, Norman2012-03-192012-03-192009-07-01https://hdl.handle.net/10986/4193This paper provides a description of the macroeconomic aftermath of natural disasters. It traces the yearly response of gross domestic product growth - both aggregated and disaggregated into its agricultural and non-agricultural components - to four types of natural disasters - droughts, floods, earthquakes, and storms. The paper uses a methodological approach based on pooling the experiences of various countries over time. It consists of vector auto-regressions in the presence of endogenous variables and exogenous shocks (VARX), applied to a panel of cross-country and time-series data. The analysis finds heterogeneous effects on a variety of dimensions. First, the effects of natural disasters are stronger, for better or worse, on developing than on rich countries. Second, while the impact of some natural disasters can be beneficial when they are of moderate intensity, severe disasters never have positive effects. Third, not all natural disasters are alike in terms of the growth response they induce, and, perhaps surprisingly, some can entail benefits regarding economic growth. Thus, droughts have a negative effect on both agricultural and non-agricultural growth. In contrast, floods tend to have a positive effect on economic growth in both major sectors. Earthquakes have a negative effect on agricultural growth but a positive one on non-agricultural growth. Storms tend to have a negative effect on gross domestic product growth but the effect is short-lived and small. Future research should concentrate on exploring the mechanisms behind these heterogeneous impacts.CC BY 3.0 IGOAGRICULTURAL GROWTHAGRICULTURAL SECTORAVALANCHESAVERAGE GROWTHAVERAGE GROWTH RATEBUSINESS CYCLEBUSINESS CYCLESCAPITAL ACCUMULATIONCASUALTIESCATASTROPHIC EVENTSCENTRE FOR RESEARCH ON THE EPIDEMIOLOGYCOUNTRY SPECIFICITYCOVARIANCE MATRIXCREDCROSS-COUNTRY ANALYSISDAMAGESDAT DATABASEDECLARATIONDESCRIPTIVE STATISTICSDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT INDICATORSDEVELOPMENT RESEARCHDISASTERDISASTER EVENTSDISASTER REDUCTIONDISASTER RISKDISASTER RISK REDUCTIONDISASTER TYPEDIVERSIFICATIONDROUGHTDROUGHTSEARTHQUAKEEARTHQUAKESECONOMIC ACTIVITYECONOMIC BEHAVIORECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC PERFORMANCEECONOMICSECONOMICS LETTERSEDUCATIONAL ATTAINMENTENDOGENOUS VARIABLESERROR TERMSEXPLANATORY VARIABLESEXTERNAL CONDITIONSEXTERNAL SHOCKSFAMINESFINANCIAL CONDITIONSFINANCIAL SECTORFIRESFIXED EFFECTSFLOODFLOODSGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTGROWTH EFFECTGROWTH IMPACTGROWTH MODELGROWTH PERFORMANCEGROWTH RATEGROWTH RATESHUMAN CAPITALINSECT INFESTATIONSINTERNATIONAL MONETARY FUNDLABOR FORCELANDSLIDESLEVEL OF DEVELOPMENTLONG-RUN GROWTHLOW-INCOME COUNTRIESMACROECONOMIC OUTCOMESMONOTONIC EFFECTSNATURAL DISASTERNATURAL DISASTERSNATURAL HAZARDSNEGATIVE EFFECTNEGATIVE IMPACT0 HYPOTHESISOUTPUT VOLATILITYPER CAPITA GROWTHPER CAPITA INCOMEPOLICY RESEARCHPROMOTING GROWTHPUBLIC INFRASTRUCTURERECESSIONSRECONSTRUCTIONREGRESSION ANALYSISREGRESSION MODELRICH COUNTRIESSIGNIFICANT EFFECTSTANDARD ERRORSSTORMSTORMSTRADE OPENNESSTRADE SHOCKSTSUNAMISTYPE OF DISASTERTYPE OF DISASTERSURBAN AREASVOLCANIC ERUPTIONSVOLCANOWEALTHWIND STORMSWorld Bank10.1596/1813-9450-5002