Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach

Baig, N., Khan, S., Gilal, N. G., & Qayyum, A. (2018). Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach. Studies in Business and Economics, 13(1), 5-20.

16 Pages Posted: 16 Apr 2021

See all articles by Nida Baig

Nida Baig

Huazhong University of Science and Technology - College of Public Administration

Shahbaz Khan

Zhongnan University of Economics and Law, School of Finance, Students

Naeem Gul Gilal

Huazhong University of Science and Technology

Dr. Abdul Qayyum

Bahria University; Sungkyunkwan University, SKK Business School, Students

Date Written: April 3, 2018

Abstract

This article strives to work out the causal relationship between natural disasters and economic growth in Pakistan. The study empirically tests the linkage using econometric techniques autoregressive distributed lag bound model by Pesaran (2001) and Granger causality test. We develop a proxy for the loss of natural disasters by a similar method as Noy (2009) and Bergholt et.al, (2012) did. The results of ARDL bounds testing approach evidence a negative long run relationship between the proxies of natural disasters and economic growth. The results of Granger Causality depict the uni-directional causality from natural disasters to economic growth both in short-run and long-run. Overall, the study determines that natural disasters deteriorate economic growth in Pakistan. This is the first study in Pakistan to assess the causal relationship among natural disasters and economic growth. So, further empirical evidence may link natural disasters to microeconomics and financial indicators. In future, researchers might control the impact of foreign development aid, remittances, political stability corruption rating. Natural disasters are an alarming issue and, addressing the questions related to their impacts on welfare of human being and economic growth of the countries contain significant importance in order to attract the attention of global development agencies and policymakers. As per INFORM (2015) risk index, Pakistan has the highest vulnerability towards natural disasters after Afghanistan. So, the study contains more significant value in context of Pakistan

Keywords: Natural Disaster, Economic Growth

Suggested Citation

Baig, Nida and Khan, Shahbaz and Gilal, Naeem Gul and Qayyum, Abdul, Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach (April 3, 2018). Baig, N., Khan, S., Gilal, N. G., & Qayyum, A. (2018). Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach. Studies in Business and Economics, 13(1), 5-20. , Available at SSRN: https://ssrn.com/abstract=3818914

Nida Baig

Huazhong University of Science and Technology - College of Public Administration ( email )

Luoyu Road 1037
Wuhan
China

Shahbaz Khan

Zhongnan University of Economics and Law, School of Finance, Students ( email )

WenQuan Building, 182# Nanhu Avenue
East Lake High-tech Development Zone
Wuhan
China

Naeem Gul Gilal

Huazhong University of Science and Technology

1037 Luoyu Rd
Wuhan, Hubei 430074
China

Abdul Qayyum (Contact Author)

Bahria University ( email )

E.8 Shangrilla Road
Naval Complex
Islamabad, 44000
Pakistan

Sungkyunkwan University, SKK Business School, Students ( email )

Korea, Republic of (South Korea)

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