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Economic Policies and the Impact of Natural Disasters on Economic Growth: A Threshold Regression Approach

Author

Listed:
  • Zeb Aurangzeb

    (University of Guelph)

  • Thanasis Stengos

    (University of Guelph)

Abstract

This paper investigates the impact of natural disasters on the long-term macroeconomic performance of a country. More specifically, we want to see whether the impact of natural disasters on economic growth is uniform across countries or it is differentiated according to the macroeconomic policy environment and other structural characteristics of the countries at hand. In order to test this empirically we use the Threshold Regression (TR) approach of Hansen (2000) and data from 90 countries over the period of 1970 to 2001. Our analysis reveals several interesting patterns such as: countries with higher per capita income, higher government spending, higher degree of openness to trade, less fiscal imbalances and greater financial stability are better able to withstand the disaster shock and further prevent its impact on long-term economic growth.

Suggested Citation

  • Zeb Aurangzeb & Thanasis Stengos, 2012. "Economic Policies and the Impact of Natural Disasters on Economic Growth: A Threshold Regression Approach," Economics Bulletin, AccessEcon, vol. 32(1), pages 229-241.
    • Handle: RePEc:ebl:ecbull:eb-11-00440
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    References listed on IDEAS

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    Cited by:

    1. Cécile Couharde & Rémi Generoso, 2015. "Hydro-climatic thresholds and economic growth reversals in developing countries: an empirical investigation," EconomiX Working Papers 2015-26, University of Paris Nanterre, EconomiX.
    2. Halkos, George & Managi, Shunsuke & Tsilika, Kyriaki, 2018. "Spatiotemporal distribution of inclusive wealth data: An illustrated guide," MPRA Paper 85711, University Library of Munich, Germany.
    3. Klomp, Jeroen & de Haan, Jakob, 2016. "Election cycles in natural resource rents: Empirical evidence," Journal of Development Economics, Elsevier, vol. 121(C), pages 79-93.
    4. Halkos, George & Managi, Shunsuke & Tsilika, Kyriaki, 2018. "The multi-layer nature of Inclusive Wealth data and their dynamic interpretation," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 160-170.
    5. Junaid Khan & Muhammad Faizan Malik & Muhammad Ilyas, 2018. "Banking Sector Performance and Political Stability9apos9s Impact on Economic Growth in Pakistan," Global Economics Review, Humanity Only, vol. 3(1), pages 81-89, June.

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    More about this item

    Keywords

    Natural Disasters; Economic Policies; Economic Growth; Threshold Regression;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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