The Impact of Earthquakes on Economic Activity: Evidence from Italy

Francesco Porcelli and Riccardo Trezzi

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Although earthquakes are large idiosyncratic shocks for affected regions, little is known of their impact on economic activity. Seismic events are rare, the data is crude (the Richter scale measures the magnitude but says nothing of the associated damages) and counterfactuals are often entirely absent. We suggest an innovative identification strategy to address these issues based on the so-called ’Mercalli scale’ ranks - a geophysical methodology devised to gauge seismic damages relying on a newly compiled dataset following 95 Italian provinces from 1986 to 2011 (including 22 seismic episodes) offering an ideal ground for identification. Also, we carry out counterfactuals taking advantage of ex ante identical neighboring provinces that only differ ex post in terms of damages. Contrary to conventional views, we find that the impact of seismic events on output is negligible (or even positive) including after the most devastating events.

Keywords: Natural disasters; Mercalli scale (search for similar items in EconPapers)
JEL-codes: E00 J01 Q54 (search for similar items in EconPapers)
Date: 2016-08-24
New Economics Papers: this item is included in nep-eur and nep-mac
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The impact of earthquakes on economic activity: evidence from Italy (2019)
Working Paper: The Impact of Earthquakes on Economic Activity: Evidence from Italy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1650

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