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ABSTRACT
This article investigates the long-run consequences of economic disasters. The results suggest the negative long-run effect of economic disasters on output growth and the limited empirical importance of the investment channel.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 The sample comprises 5549 country-year observations (ranging from 1790 to 2009) and 180 economic disasters.
2 By using the definition of output growth rate as , this model can be rewritten in a dynamic model for the level of
.
3 Note, that our results do not necessarily reject the investment channel because we cannot dismiss the possibility that the lack of empirical importance is related to the imprecise historical investment data.