A short note on natural disasters and growth

Natural disasters constitute a serious threat on a global level. Each year they generate large losses, and their consequences affect macroeconomic magnitudes such as growth. The literature on this topic (disasters and growth) is scarce and the theoretical predictions are not unambiguous. In this note, this topic is revisited based on different growth models. The results indicate that the direction of the effect is not obvious from a theoretical perspective and presents wide heterogeneities: thus, the effect differs according to the parameter that is assumed to be affected by the occurrence of the disaster (capital stock, savings rate, technology, etc.) and according to the time horizon considered. Contrary to expectations, a disaster could result in increased growth if it promotes (precautionary) saving, facilitates capital upgrading (replacement of destroyed capital with a newer one), or encourages investment in R&D.