DO NATURAL DISASTERS AFFECT ECONOMIC GROWTH IN BANGLADESH ?

This paper investigates the relationship between natural disasters and economic growth in Bangladesh from 1960 to 2014. Moreover, the paper focuses on the long-run impact of natural disasters on economic growth in Bangladesh. As control variables, this study includes capital stock, trade openness, and population growth. In addition, the actual path and counterfactual path will be included to observe the path of economic growth. The autoregressive distributed lag (ARDL) model will be applied to examine the relationship between natural disasters and economic growth. The results of natural disasters have a negative relationship on economic growth in the long-run. Surprisingly, the result of the error correction term for the counterfactual path is significant at -1.13. This suggested an overcorrection of 13% in Bangladesh. The government of Bangladesh should reserve money to reconstruct their economic growth in the event that natural disasters occur.