Short-term impact of tropical cyclones in Madagascar: evidence from nightlight data

This paper explores the short-term effect of tropical cyclones on economic activity at a local level in Madagascar. To do so, we combine high-resolution spatial data about nightlight brightness and exposure to tropical cyclones with geographic information at the smallest administrative level in Madagascar, namely the Fokontany. Our findings reveal that exposure to tropical cyclones leads to an ambiguous economic response as proxied by nocturnal brightness during the first year after the shock. However, during the second year, nightlights clearly increase, leading to an overall beneficial effect of 5% just 2 years after the tropical cyclone. We then provide a finer analysis by interacting wind speed exposure with variables that capture many heterogenous dimensions of our data. This analysis shows that for Fokontany sharing specific characteristics, the short-run effect of tropical cyclones is negative. However, the positive effect of exposure in the second year emerges as a regular pattern in our analysis. Our empirical study is in line with economic mechanisms suggesting that after a period of contraction, the impacted economy rebounds beyond the counterfactual trend that would otherwise be observed in the absence of a shock.