1 / 15

Shaken, Not Stirred: The Impact of Disasters on International Trade

Shaken, Not Stirred: The Impact of Disasters on International Trade. Martin Gassebner, Alexander Keck and Robert Teh. Outline. Introduction and Motivation Literature Impact on Trade Empirical Specification Results Conclusions. Introduction and Motivation.

jerold
Download Presentation

Shaken, Not Stirred: The Impact of Disasters on International Trade

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Shaken, Not Stirred:The Impact of Disasters on International Trade Martin Gassebner, Alexander Keck and Robert Teh

  2. Outline • Introduction and Motivation • Literature • Impact on Trade • Empirical Specification • Results • Conclusions

  3. Introduction and Motivation • Disasters are increasing in quantity and destructiveness • Possible explanations: • Better collection of data • Global warming (Emanuel 2005, Intergovernmental Panel on Climate Change 2001) • Increased population density, proximity to costal areas (Kunkel, Pielke and Chagnon 1999)

  4. Literature • Various effects of disasters have been explored: • Demographic trends and structures (Smith and McCarty 1996, Neumayer and Plümper 2006) • Determinants of mortality rates of disasters (Anbarci, Escaleras and Register 2005, Kahn 2005) • Macroeconomic impacts (Albala-Bertrand 1993, Pelling, Özerdem and Barakat 2002, Skidmore and Toya 2002, Auffret 2003, Freeman, Keen and Mani 2003, Rasmussen 2004) • International financial flows (Yang 2006)

  5. Impact on Trade I • Direct effects (human and physical capital loss) • Indirect effects (decline in economic activity) • Possible positive recovery effects • Disaster has to be of „large“ magnitude • Decision rule: 1,000 deaths; 1,000 injured; 100,000 affected or 1 billion $ damages • Corresponds to Munich Re definition of „great natural catastrophe“

  6. Impact on Trade II • Physical size of country might matter • Smaller countries are hit harder (e.g. Hurricane in Florida vs. Grenada) • Level of democracy might matter • Sen (1999): „There has never been a famine in a functioning multiparty democracy“ • Democracy might additionally be a proxy for: • Absence of corruption • Quality of bureaucracy

  7. Empirical specification I • Standard gravity approach: ln(rimpiet) = ciet + β1ln(gdpiet) + β2ln(gdppciet) + β3lockiet + β4ln(distiet) + β5Disasterit + β6Disasteret + βXiet + eiet Xiet includes dummies for: common border, same official language, common colonizer, colonial relationships (ever), colonial relationships (post 1945), same nation

  8. Empirical specification II • Two set-ups for ciet • Always time-specific fixed effects, plus • a) Importer- and exporter-specific fixed effects • b) Trading pair-specific fixed effects • Disaster variables: source EM-DAT 2005 • Count variable: Decision rule events per year • Count variable scaled by area • Interaction term: Count variable * Democracy score

  9. Results Ia (Gravity variables)

  10. Results Ib (Disaster Variables)

  11. Results II

  12. Results III

  13. Results IV

  14. Conclusions • Disasters reduce international trade flows • Smaller and undemocratic countries suffer more • Example one disaster in Costa Rica in 2003 would have resulted in a reduction of: Imports by 0,3% Exports by 3,9%

  15. Thank you!

More Related