The Long-Run Effect of Economic Disasters
10 Pages Posted: 12 Apr 2016 Last revised: 12 Apr 2017
Date Written: February 9, 2017
This paper investigates the long-run consequences of economic disasters. The research is based on the historical data for 38 OECD and non OECD countries over the last two centuries. Results of the research indicate the negative long-run effect of economic disasters on output growth. The research also suggests that the negative relationship between output growth and volatility reflects the negative effect of economic disasters on output growth rather than the effect of ‘normal’ output volatility on growth. Results do not reveal strong empirical support to the hypothesis that investments are the main channel through which economic disasters affect output growth.
Keywords: economic disasters, output growth, investment, output volatility
JEL Classification: E32, E22, O47
Suggested Citation: Suggested Citation