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Do natural disasters influence long-term saving?: Assessing the impact of the 2008 Sichuan earthquake on household saving rates using synthetic control

Kevin Luo () and Tomoko Kinugasa ()
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Kevin Luo: Graduate School of Economics, Kobe University
Tomoko Kinugasa: Graduate School of Economics, Kobe University

No 1804, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: In this study, employing the synthetic control method (Abadie et al., 2003), we examine the short- and long-term effects of the 2008 Sichuan earthquake on saving behaviors. The results indicate that, in the short-run, the earthquake has caused drastic declines in household saving rates-from 24% to 7% and from 23% to 21% for rural and urban populations, respectively. However, household saving rates recovered to the baseline shortly after the shock, and they exactly match their counterfactual counterparts in the period ahead. The estimates imply that, at the aggregate level, the earthquake has no discernible long-run impact on the saving propensity of the affected population.

Keywords: Natural disaster; Sichuan earthquake; Saving; Synthetic control method; long-term impact (search for similar items in EconPapers)
JEL-codes: Q54 D81 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-mac
Date: 2018-02
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