Economic impact of natural disasters: a myth or mismeasurement?

Seong D. Yun and Ayoung Kim ()

Applied Economics Letters, 2022, vol. 29, issue 10, 861-866

Abstract: This study sheds light on possible spatial aggregation bias and mismeasurement in natural disaster impacts on economic growth when adopting the synthetic control method. Using the impacted US areas of Hurricane Katrina in 2005 as a case study, we compared trends of real GRDP per capita, population, and GRDP at New Orleans-Metairie metropolitan statistical area and Louisiana State, 1992–2017. This study empirically demonstrates that improper spatial units of analysis could distort the causal inference in the synthetic control method. Additionally, per capita growth as indicators of recovery from natural disasters is likely to misinterpret economic growth when affected regions experience a sharp decrease in population. These biased results arouse special attention to possible underestimation of natural disaster impacts, particularly when analysing economically lagging regions. Also, seemingly increasing per capita indicators do not always support evidence of creative destruction after natural disasters.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2021.1896667 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:29:y:2022:i:10:p:861-866

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2021.1896667

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().