Kara Riesing


The Long-Run Effects of Natural Disasters and Terrorist Attacks

Reconstruction in the aftermath of large natural disasters and terrorist attacks plays a keyrole in the future trajectory of a country’s economy. This paper focuses on the long-run effects of natural disasters and terrorist attacks on growth and the channels through which they affect growth. Using the conceptual framework of a Solow-Swan model I examine an unbalanced annual panel of 125 countries spanning from 1970 to 2015 and find that domestic terrorist attacks, floods, and storms have a similar negative effect on growth, while transnational terrorist attacks and earthquakes have no significant effect on growth. Examining the channels through which they affect growth brings to the forefront the differences between these different types of events. I find that domestic terrorist attacks lead to increased military expenditures in their wake, while floods lead to increased non-military expenditures in their aftermath. Reviewing the data by developed and emerging economies reveals that developed economies are better able to absorb the shock of terrorist attacks as well as natural disasters. I find that although emerging economies are able to absorb the shock of transnational and domestic terrorist attacks, they experience some adverse effects from floods and storms.

Here are links to the full paper and the appendix.

Effects of Tornadoes on Local Labor Markets

In this paper, I examine the change in local labor markets caused by extreme tornadoes that occur in counties of the contiguous United States. I also investigate the effect these tornadoes have on neighboring counties and evaluate the labor market response in urban and rural counties separately as well. Using a generalized difference-in-difference approach on quarterly data spanning from 1975 to 2016, I find that violent tornadoes lead to persistently higher wages per worker two years following a tornado. Reviewing the data by urban and rural counties shows that a strong effect is observed in the employment levels of an urban county that is struck by a tornado, while the effect in the rural county is observed on wages per worker. Further, evaluating the response of labor markets by sectors reveals the industrial sectors that experience increased labor market activity. The response of the labor market varies based on the intensity of the tornado.

Here are links to the full paper and the appendix.

The Path to Recovery in the Wake of Terrorist Attacks

This paper examines the path of GDP growth and its disaggregated industrial, service, and agricultural sector value added components in the aftermath of two types of terrorism - transnational and domestic terrorism. Using a panel VAR model on cross country annual data from 1970 to 2015 I find that fatalities caused by neither domestic nor transnational terrorist attacks lead to a significant change in GDP growth. Examining the disaggregated industrial, service, and agricultural sector components of GDP growth reveals that even disaggregated the value added components of GDP growth experience no adverse effects from the deaths caused by transnational and domestic terrorist attacks. I also distinguish the emerging economies from the entire sample to find that GDP growth in emerging economies experience no significant effects due to the casualties of transnational and domestic terrorist attacks.

Future Research

Even though I am interested in continuing research on the effects of natural disasters as well as terrorist attacks, I am also interested in research related to economic growth and development. I am currently working on a research project that estimates the effect of women's participation and success at the Olympic games on economic growth and development. This is a co-authored paper with Andrew Jonelis and Jenny Minier titled, "Olympic Indicators and Female Economic Empowerment". This paper assumes that when a group of people are systematically denied opportunities in education and the labor market, and deprived of a voice in making decisions, allocations of labor and capital are likely to be sub-optimal and rates of technological progress are likely to be lower, reducing economic growth. Our results suggest that countries with a more balanced ratio of female to male Olympians, proxying female status across society, grow faster than their peers.

As an expansion on my research on natural disasters and terrorist attacks, I would like to examine the effects of destructive events based on the timing of their occurrence in relation to business cycles. I would also like to continue research on tornadoes by including federal aid in the analysis to examine how much of the increase in wages per worker can be contributed to federal aid. I would also like to examine whether developing countries in the aftermath of disastrous events have easier access to capital than before. Another interesting aspect that I would like to explore is whether a billion dollar disaster leads to any redistribution in wealth.