IDEAS home Printed from https://ideas.repec.org/p/awi/wpaper/0685.html
   My bibliography  Save this paper

Unraveling the effects of tropical cyclones on economic sectors worldwide

Author

Listed:
  • Kunze, Sven

Abstract

This paper unravels the contemporaneous, lagged, and indirect effects of tropical cyclones on annual sectoral growth worldwide. The main explanatory variable is an area weighted measure for local tropical cyclone intensity based on meteorological data, which is included in a panel analysis for a maximum of 213 countries over the 1971-2015 period. I find a significantly negative influence of tropical cyclones on three sector aggregates including agriculture, infrastructure, as well as trade and tourism. In subsequent years, tropical cyclones negatively affect nearly all sectors. However, the Input-Output analysis shows that production processes are sticky and indirect economic costs are low.

Suggested Citation

  • Kunze, Sven, 2020. "Unraveling the effects of tropical cyclones on economic sectors worldwide," Working Papers 0685, University of Heidelberg, Department of Economics.
    • Handle: RePEc:awi:wpaper:0685
    Note: This paper is part of http://archiv.ub.uni-heidelberg.de/volltextserver/view/schriftenreihen/sr-3.html
    as

    Download full text from publisher

    File URL: http://nbn-resolving.de/urn/resolver.pl?urn=urn:nbn:de:bsz:16-heidok-283755
    File Function: Frontdoor page on HeiDOK
    Download Restriction: no
    File URL: https://archiv.ub.uni-heidelberg.de/volltextserver/28375/13/Kunze_2020_dp685.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mendelsohn, Robert & Emanuel, Kerry & Chonabayashi, Shun, 2011. "The impact of climate change on global tropical storm damages," Policy Research Working Paper Series 5562, The World Bank.
    2. Stéphane Hallegatte & Valentin Przyluski, 2010. "The Economics of Natural Disasters," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(02), pages 14-24, July.
    3. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    4. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.
    5. Eric Strobl, 2011. "The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 575-589, May.
    6. Jan Oosterhaven, 2017. "On the limited usability of the inoperability IO model," Economic Systems Research, Taylor & Francis Journals, vol. 29(3), pages 452-461, July.
    7. Andréas Heinen & Jeetendra Khadan & Eric Strobl, 2019. "The Price Impact of Extreme Weather in Developing Countries," The Economic Journal, Royal Economic Society, vol. 129(619), pages 1327-1342.
    8. Christoph E. Boehm & Aaron Flaaen & Nitya Pandalai-Nayar, 2019. "Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake," The Review of Economics and Statistics, MIT Press, vol. 101(1), pages 60-75, March.
    9. Thiemo Fetzer, 2020. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    10. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    11. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
    12. Daron Acemoglu & Vasco M. Carvalho & Asuman Ozdaglar & Alireza Tahbaz‐Salehi, 2012. "The Network Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 80(5), pages 1977-2016, September.
    13. Roger Newson, 1998. "PARMEST: Stata module to create new data set with one observation per parameter of most recent model," Statistical Software Components S352601, Boston College Department of Economics, revised 11 Jul 2022.
    14. Strobl, Eric, 2012. "The economic growth impact of natural disasters in developing countries: Evidence from hurricane strikes in the Central American and Caribbean regions," Journal of Development Economics, Elsevier, vol. 97(1), pages 130-141.
    15. World Bank & United Nations, 2010. "Natural Hazards, UnNatural Disasters : The Economics of Effective Prevention," World Bank Publications - Books, The World Bank Group, number 2512.
    16. James B. Elsner & James P. Kossin & Thomas H. Jagger, 2008. "The increasing intensity of the strongest tropical cyclones," Nature, Nature, vol. 455(7209), pages 92-95, September.
    17. Millner, Antony & McDermott, Thomas K. J., 2016. "Model confirmation in climate economics," LSE Research Online Documents on Economics 67122, London School of Economics and Political Science, LSE Library.
    18. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    19. Jesús Crespo Cuaresma & Jaroslava Hlouskova & Michael Obersteiner, 2008. "Natural Disasters As Creative Destruction? Evidence From Developing Countries," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 214-226, April.
    20. Robert Mendelsohn & Kerry Emanuel & Shun Chonabayashi & Laura Bakkensen, 2012. "The impact of climate change on global tropical cyclone damage," Nature Climate Change, Nature, vol. 2(3), pages 205-209, March.
    21. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    22. Tobias Sieg & Thomas Schinko & Kristin Vogel & Reinhard Mechler & Bruno Merz & Heidi Kreibich, 2019. "Integrated assessment of short-term direct and indirect economic flood impacts including uncertainty quantification," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-21, April.
    23. Dupor, Bill, 1999. "Aggregation and irrelevance in multi-sector models," Journal of Monetary Economics, Elsevier, vol. 43(2), pages 391-409, April.
    24. Manfred Lenzen & Daniel Moran & Keiichiro Kanemoto & Arne Geschke, 2013. "Building Eora: A Global Multi-Region Input-Output Database At High Country And Sector Resolution," Economic Systems Research, Taylor & Francis Journals, vol. 25(1), pages 20-49, March.
    25. Jean-Noël Barrot & Julien Sauvagnat, 2016. "Input Specificity and the Propagation of Idiosyncratic Shocks in Production Networks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1543-1592.
    26. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    27. Solomon M. Hsiang & Amir S. Jina, 2014. "The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence From 6,700 Cyclones," NBER Working Papers 20352, National Bureau of Economic Research, Inc.
    28. Elliott, Robert J.R. & Strobl, Eric & Sun, Puyang, 2015. "The local impact of typhoons on economic activity in China: A view from outer space," Journal of Urban Economics, Elsevier, vol. 88(C), pages 50-66.
    29. Ouattara, Bazoumana & Strobl, Eric, 2013. "The fiscal implications of hurricane strikes in the Caribbean," Ecological Economics, Elsevier, vol. 85(C), pages 105-115.
    30. Kousky, Carolyn, 2014. "Informing climate adaptation: A review of the economic costs of natural disasters," Energy Economics, Elsevier, vol. 46(C), pages 576-592.
    31. Suresh De Mel & David McKenzie & Christopher Woodruff, 2012. "Enterprise Recovery Following Natural Disasters," Economic Journal, Royal Economic Society, vol. 122(559), pages 64-91, March.
    32. Albala-Bertrand, J. M., 1993. "Natural disaster situations and growth: A macroeconomic model for sudden disaster impacts," World Development, Elsevier, vol. 21(9), pages 1417-1434, September.
    33. Burke, M. & Craxton, M. & Kolstad, C.D. & Onda, C. & Allcott, H. & Baker, E. & Barrage, L. & Carson, R. & Gillingham, K. & Graff-Zivin, J. & Greenstone, M. & Hallegatte, S. & Hanemann, W.M. & Heal, G., 2016. "Opportunities for advances in climate change economics," ISU General Staff Papers 3565, Iowa State University, Department of Economics.
    34. Burke, M & Craxton, M & Kolstad, CD & Onda, C & Allcott, H & Baker, E & Barrage, L & Carson, R & Gillingham, K & Graf-Zivin, J & Greenstone, M & Hallegatte, S & Hanemann, WM & Heal, G & Hsiang, S & Jo, 2016. "Opportunities for advances in climate change economics," University of California at Santa Barbara, Recent Works in Economics qt4tc5d9pb, Department of Economics, UC Santa Barbara.
    35. Horvath, Michael, 2000. "Sectoral shocks and aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 45(1), pages 69-106, February.
    36. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 181-198, July.
    37. Toya, Hideki & Skidmore, Mark, 2007. "Economic development and the impacts of natural disasters," Economics Letters, Elsevier, vol. 94(1), pages 20-25, January.
    38. Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, vol. 40(7), pages 1317-1336.
    39. Solomon M. Hsiang, 2016. "Climate Econometrics," NBER Working Papers 22181, National Bureau of Economic Research, Inc.
    40. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    41. Hallegatte, Stephane & Przyluski, Valentin, 2010. "The economics of natural disasters : concepts and methods," Policy Research Working Paper Series 5507, The World Bank.
    42. André Gröger & Yanos Zylberberg, 2016. "Internal Labor Migration as a Shock Coping Strategy: Evidence from a Typhoon," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 123-153, April.
    43. Simon Heß, 2017. "Randomization inference with Stata: A guide and software," Stata Journal, StataCorp LP, vol. 17(3), pages 630-651, September.
    44. W J Wouter Botzen & Olivier Deschenes & Mark Sanders, 2019. "The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 167-188.
    45. Matthew A Cole & Robert J R Elliott & Toshihiro Okubo & Eric Strobl, 2019. "Natural disasters and spatial heterogeneity in damages: the birth, life and death of manufacturing plants," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 373-408.
    46. Solomon Hsiang, 2016. "Climate Econometrics," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 43-75, October.
    47. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    48. Thiemo Fetzer, 0. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    49. Elliott, Robert J.R. & Liu, Yi & Strobl, Eric & Tong, Meng, 2019. "Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eichenauer, Vera Z. & Fuchs, Andreas & Kunze, Sven & Strobl, Eric, 2020. "Distortions in aid allocation of United Nations flash appeals: Evidence from the 2015 Nepal earthquake," World Development, Elsevier, vol. 136(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sven Kunze, 2021. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 545-569, April.
    2. Kunze, Sven, 2018. "Unraveling the effects of tropical cyclones on economic sectors worldwide," Working Papers 0653, University of Heidelberg, Department of Economics.
    3. Kunze, Sven, 2017. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide," Working Papers 0641, University of Heidelberg, Department of Economics.
    4. Matteo Coronese & Davide Luzzati, 2022. "Economic impacts of natural hazards and complexity science: a critical review," LEM Papers Series 2022/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Susana Ferreira, 2024. "Extreme Weather Events and Climate Change: Economic Impacts and Adaptation Policies," Annual Review of Resource Economics, Annual Reviews, vol. 16(1), pages 207-231, October.
    6. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    7. Fujin Zhou & Wouter Botzen, 2021. "Firm Level Evidence of Disaster Impacts on Growth in Vietnam," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 277-322, June.
    8. Jasmin Gröschl & Alexander Sandkamp, 2023. "Flood Events and Plant Level Trade: A Chinese Experience," ifo Working Paper Series 389, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Elliott, Robert J.R. & Liu, Yi & Strobl, Eric & Tong, Meng, 2019. "Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    10. Vinzenz Peters & Jingtian Wang & Mark Sanders, 2023. "Resilience to extreme weather events and local financial structure of prefecture-level cities in China," Climatic Change, Springer, vol. 176(9), pages 1-21, September.
    11. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    12. Chaitat Jirophat & Pym Manopimoke & Suparit Suwanik, 2022. "The Macroeconomic Effects of Climate Shocks in Thailand," PIER Discussion Papers 188, Puey Ungphakorn Institute for Economic Research.
    13. Berlemann, Michael & Wenzel, Daniela, 2018. "Hurricanes, economic growth and transmission channels," World Development, Elsevier, vol. 105(C), pages 231-247.
    14. Clò, Stefano & David, Francesco & Segoni, Samuele, 2024. "The impact of hydrogeological events on firms: Evidence from Italy," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    15. Xiao-Chen Yuan & Xun Sun, 2019. "Climate change impacts on socioeconomic damages from weather-related events in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(3), pages 1197-1213, December.
    16. Pelli, Martino & Tschopp, Jeanne & Bezmaternykh, Natalia & Eklou, Kodjovi M., 2023. "In the eye of the storm: Firms and capital destruction in India," Journal of Urban Economics, Elsevier, vol. 134(C).
    17. Hiroki Onuma & Kong Joo Shin & Shunsuke Managi, 2021. "Short-, Medium-, and Long-Term Growth Impacts of Catastrophic and Non-catastrophic Natural Disasters," Economics of Disasters and Climate Change, Springer, vol. 5(1), pages 53-70, April.
    18. Thomas Steinwachs, 2019. "Geography Matters: Spatial Dimensions of Trade, Migration and Growth," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 81.
    19. Bhaskar Jyoti Neog, 2022. "Temperature shocks and rural labour markets: evidence from India," Climatic Change, Springer, vol. 171(1), pages 1-20, March.
    20. Jere Lehtomaa & Clément Renoir, 2023. "The Economic Impact of Tropical Cyclones: Case Studies in General Equilibrium," CER-ETH Economics working paper series 23/382, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

    More about this item

    Keywords

    tropical cyclones; sectoral economic growth; environment and growth; natural disasters; input-output analysis;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:awi:wpaper:0685. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabi Rauscher (email available below). General contact details of provider: https://edirc.repec.org/data/awheide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.