Natural disasters and economic growth: revisiting the evidence

In the last decades, a large number of empirical studies have assessed the linkage between natural disasters and economic growth using cross-country and panel data. The existing results point towards the existence of heterogeneity in the response of macroeconomic variables to the presence of disaster risk and to the occurrence of natural disasters. In this piece, we use Bayesian model averaging techniques to perform robust inference on the association between natural disaster risk and GDP per capita growth for a global sample of 123 countries, with a special emphasis on unveiling the sources of heterogeneity in this relationship. Our results indicate that the lack of partial correlation between natural disaster risk and economic growth is a robust empirical regularity for the period 1970-2019, and that there is no systematic evidence of effect heterogeneity across income levels or continents.