Impact of natural disasters: average effects hide heterogeneity across growth regimes and time horizons *

Gilles Dufrénot () and Edem Egnikpo ()
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Gilles Dufrénot: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IEP Aix-en-Provence - Sciences Po Aix - Institut d'études politiques d'Aix-en-Provence
Edem Egnikpo: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université

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Abstract: We propose a new approach to measure the sensitivity of economic growth to natural disasters in developing countries at different time horizons (short, medium, and long term). We allow for heterogeneous effects across growth regimes and intensities of disaster shocks using quantile-on-quantile regressions and wavelet decomposition.Our findings yield several insights. First, small disaster shocks boost GDP per capita growth in low-growth countries across all horizons. By contrast, in high-growth countries, such shocks cause sharp short-term growth declines, followed by a rapid recovery in the medium term, albeit without regaining the pre-disaster growth trajectory in the long term. Second, severe disaster shocks lead to long-term growth losses in highgrowth countries, despite their initial resilience. Conversely, low-growth countries experience immediate and persistent growth declines that worsen over time. Third, the role of macroeconomic variables in mitigating or amplifying growth losses varies depending on the growth regime, disaster severity, and time horizon.

Keywords: Natural Disasters; growth; developing countries; quantile-on-quantile (search for similar items in EconPapers)
Date: 2024-12
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