Investments under Risk: Evidence from Hurricane Strikes

Rajesh Aggarwal and Mufaddal Baxamusa

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We demonstrate that firms with plants in areas subject to a significant hurricane strike reduce their capital expenditures at the hurricane-affected plants and shift capital expenditures to plants in non-hurricane-affected areas. This effect is not present prior to 1997 and only appears from 1997 on. Our evidence is consistent with the possibility that a significant climate event such as the signing of the Kyoto Protocol raised the salience of the perceived risk from actual hurricane strikes and shifted firm behavior.

Date: 2025-06
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:25-43

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