After the Storm

Abstract

Empirical research on the impact of natural disasters on economic growth has provided contradictory results and few studies have focused on the United States. In this thesis, I bridge the gap by examining the merits of existing claims on the relationship between natural disasters and growth at the states and county level in the U.S. I find that climatological and geophysical disasters have a small and negative impact on growth rates at the state level, but that this impact disappears over time. At the county level, I find that tornados have a slight but negative impact on per capita GDP levels and growth rates over a five year period across three states that experience this natural phenomenon. Controlling for FEMA aid, I find that there may be upward omitted variable bias in regressions that do not include the amount of aid as a variable. I find evidence that FEMA aid has a small but positive impact on growth and per capita GDP levels at both the county and state level.