<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This article strives to work out the causal relationship between natural disasters and economic growth in Pakistan. The study empirically tests the linkage using econometric techniques autoregressive distributed lag bound model by <xref ref-type="bibr" rid="j_sbe-2018-0001_ref_038_w2aab3b7b1b1b6b1ab1ac38Aa">Pesaran (2001)</xref> and Granger causality test. We develop a proxy for the loss of natural disasters by a similar method as <xref ref-type="bibr" rid="j_sbe-2018-0001_ref_034_w2aab3b7b1b1b6b1ab1ac34Aa">Noy (2009)</xref> and <xref ref-type="bibr" rid="j_sbe-2018-0001_ref_003_w2aab3b7b1b1b6b1ab1ab3Aa">Bergholt et.al, (2012)</xref> did. The results of ARDL bounds testing approach evidence a negative long run relationship between the proxies of natural disasters and economic growth. The results of Granger Causality depict the uni-directional causality from natural disasters to economic growth both in short-run and long-run. Overall, the study determines that natural disasters deteriorate economic growth in Pakistan. This is the first study in Pakistan to assess the causal relationship among natural disasters and economic growth. So, further empirical evidence may link natural disasters to microeconomics and financial indicators. In future, researchers might control the impact of foreign development aid, remittances, political stability and country’s corruption rating. Natural disasters are an alarming issue and, addressing the questions related to their impacts on welfare of human being and economic growth of the countries contain significant importance in order to attract the attention of global development agencies and policymakers. As per INFORM (2015) risk index, Pakistan has the highest vulnerability towards natural disasters after Afghanistan. So, the study contains more significant value in context of Pakistan.</p></abstract>

This article strives to work out the causal relationship between natural disasters and economic growth in Pakistan. The study empirically tests the linkage using econometric techniques autoregressive distributed lag bound model by Pesaran (2001) and Granger causality test. We develop a proxy for the loss of natural disasters by a similar method as Noy (2009) and Bergholt et.al, (2012) did. The results of ARDL bounds testing approach evidence a negative long run relationship between the proxies of natural disasters and economic growth. The results of Granger Causality depict the uni-directional causality from natural disasters to economic growth both in short-run and long-run. Overall, the study determines that natural disasters deteriorate economic growth in Pakistan. This is the first study in Pakistan to assess the causal relationship among natural disasters and economic growth. So, further empirical evidence may link natural disasters to microeconomics and financial indicators. In future, researchers might control the impact of foreign development aid, remittances, political stability and country’s corruption rating. Natural disasters are an alarming issue and, addressing the questions related to their impacts on welfare of human being and economic growth of the countries contain significant importance in order to attract the attention of global development agencies and policymakers. As per INFORM (2015) risk index, Pakistan has the highest vulnerability towards natural disasters after Afghanistan. So, the study contains more significant value in context of Pakistan.

Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach

Huazhong University of Science & Technology

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach"}

This article strives to work out the causal relationship between natural disasters and economic growth in Pakistan. The study empirically tests the linkage...

Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach

Data publikacji: 08 maj 2018

Zakres stron: 5 - 20

DOI: https://doi.org/10.2478/sbe-2018-0001

Słowa kluczowe
Pakistan, Natural Disasters, Economic Growth, ARDL Bound

© 2018 Baig Nida et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Do Natural Disasters Cause Economic Growth? An ARDL Bound Testing Approach

Data publikacji: 08 maj 2018

Zakres stron: 5 - 20

DOI: https://doi.org/10.2478/sbe-2018-0001

Słowa kluczowePakistan, Natural Disasters, Economic Growth, ARDL Bound

© 2018 Baig Nida et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Słowa kluczowe
Pakistan, Natural Disasters, Economic Growth, ARDL Bound