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Quantifying the supply and demand effects of natural disasters using monthly trade data

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  • Felbermayr, Gabriel J.
  • Gröschl, Jasmin
  • Heid, Benedikt

Abstract

We develop a simple methodology to estimate monthly aggregate supply and demand conditions from bilateral international trade data for about 180 countries and 40 years. We apply our method to measure the short-run effects of natural disasters. In line with theoretical considerations, we find large, persistent negative effects of earthquakes and storms on supply and demand for credit-constrained countries. In other economies, supply is temporarily depressed while demand is temporarily up after a disaster. Using a consistent structural trade model, we back out monthly aggregate productivity measures. We quantify how the adverse productivity effects of the 1992 earthquake in Nicaragua and the 2011 Tohoku earthquake in Japan impacted those countries and their trade partners conditional on different assumptions about trade costs.

Suggested Citation

  • Felbermayr, Gabriel J. & Gröschl, Jasmin & Heid, Benedikt, 2021. "Quantifying the supply and demand effects of natural disasters using monthly trade data," Kiel Working Papers 2172, Kiel Institute for the World Economy (IfW Kiel), revised 2021.
    • Handle: RePEc:zbw:ifwkwp:2172
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    Cited by:

    1. Osberghaus, Daniel & Schenker, Oliver, 2022. "International trade and the transmission of temperature shocks," ZEW Discussion Papers 22-035, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    economic effects of natural disasters; monthly trade data; dynamic quantitative trade model; earthquakes; storms; aggregate productivity;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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