News & events

Disasters, such as floods or droughts, and climate change are short-term and long-term meteorological phenomena that are expected to have important economic effects. The measured effects of weather-related disasters on economic activity could be negative or positive depending on how the economy recovers from the disaster. Working with Xueting Jiang, I find that floods have a positive long-term effect on GDP in a panel of 179 countries, particularly in developing countries, while other types of disasters do not have statistically significant effects. Increased government expenditure is the main channel through which the positive effect manifests. Existing research shows that the estimated impact of climate change on GDP is model dependent, with some approaches better equipped than others to capture long-term effects and adaptation. I will present preliminary results applying the long differences estimator to a global country panel data set. This method should be particularly good at capturing long-run effects while avoiding pitfalls inherent in other popular models.