Naturally Negative: The Growth Effects of Natural Disasters

Gabriel Felbermayr, Jasmin Katrin Gröschl and Gabriel J. Felbermayr
Authors registered in the RePEc Author Service: Gabriel J Felbermayr and Jasmin Groeschl

No 4439, CESifo Working Paper Series from CESifo

Abstract: Growth theory predicts that natural disasters should, on impact, lower GDP per capita. However, the empirical literature does not offer conclusive evidence. Most existing studies use disaster data drawn from damage records of insurance companies. We argue that this may lead to estimation bias as damage data and the selection into the database may correlate with GDP. We build a comprehensive database of disaster events and their intensities from primary geophysical and meteorological information. In contrast to insurance data, our GeoMet data reveal a substantial negative and robust average impact effect of disasters on growth. The worst 5% disaster years come with a growth damage of at least 0.45 percentage points. That average effect is driven mainly by very large earthquakes and some meteorological disasters. Poor countries are more strongly affected by geophysical disasters; rich more by meteorological events. International openness and democratic institutions reduce the adverse effect of disasters.

Keywords: natural disasters; income per capita; openness; institutions (search for similar items in EconPapers)
JEL-codes: O44 Q54 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Naturally negative: The growth effects of natural disasters (2014)
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