Shaken, Not Stirred: the Impact of Disasters on International Trade
KOF Working Papers / KOF Swiss Economic Institute, ETH Zurich No. 139
40 Pages Posted: 2 Jul 2006
Date Written: June 2006
This paper examines the impact of major disasters on trade flows using a gravity model (170 countries, 1962-2004). As a conservative estimate, an additional disaster reduces imports on average by 0.2% and exports by 0.1%. Despite this apparent persistence of bilateral trade volumes, the impact of catastrophes depends on the democracy level and size of the affected country. In autocracies, exports and imports are significantly reduced: Had Togo been struck by a major disaster in 2000, it would have lost 6.8% of its imports and 8.2% of its exports. Democratic countries' exports suffer modest decreases, while imports are hardly affected.
Keywords: International trade, disasters, gravity model, governance
JEL Classification: F14, P52, P48, C23
Suggested Citation: Suggested Citation