In the Eye of the Storm: Firms and Capital Destruction in India

74 Pages Posted: 16 Sep 2019 Last revised: 21 Nov 2022

See all articles by Martino Pelli

Martino Pelli

Université de Sherbrooke; University of Montreal - Center for Interuniversity Research in Econometrics; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Jeanne Tschopp

University of Bern - Department of Economics

Natalia Bezmaternykh

Ryerson University, Faculty of Arts - Department of Economics

Kodjovi Eklou

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: May 20, 2022

Abstract

The number and strength of climate-change-related disasters is increasing, and developing countries are bearing most of the brunt. In this paper we study how firms react to tropical cyclones in India. Using a panel of manufacturing firms between 1995 and 2006 and cyclone data from the National Oceanic and Atmospheric Administration, we find that the average cyclone destroys 2.2% of a firm's fixed assets and decreases its sales by 3.1%. The impacts of the average cyclone are temporary and disappear after one year. Focusing on the heterogeneity of these results by firm and industry quality, we also find that capital and sales reallocate toward better-performing industries. Within industry, firm quality only matters for the response of sales.

Keywords: firms, capital, storms

JEL Classification: D22, D24, Q54

Suggested Citation

Pelli, Martino and Tschopp, Jeanne and Bezmaternykh, Natalia and Eklou, Kodjovi, In the Eye of the Storm: Firms and Capital Destruction in India (May 20, 2022). Available at SSRN: https://ssrn.com/abstract=3449708 or http://dx.doi.org/10.2139/ssrn.3449708

Martino Pelli (Contact Author)

Université de Sherbrooke ( email )

2500, Blvd de l'Université
Sherbrooke, Quebec J1K 2R1
Canada

HOME PAGE: http://sites.google.com/site/martinopelli

University of Montreal - Center for Interuniversity Research in Econometrics ( email )

C.P. 6128, Succursale Centre-ville
Montreal, Quebec H3C 3J7
Canada

Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Jeanne Tschopp

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

Natalia Bezmaternykh

Ryerson University, Faculty of Arts - Department of Economics ( email )

Canada

Kodjovi Eklou

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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