Shake me the money!
Cambridge Working Papers in Economics
Faculty of Economics
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Trezzi, R., & Porcelli, F. (2014). Shake me the money!. https://doi.org/10.17863/CAM.4954
During a natural disaster, the negative supply shock due to the destruction of productive capacity is counteracted by a positive demand shock due to public grants for assistance and reconstruction positing an identification issue in empirical work. Focusing on the 2009 'Aquilano' earthquake in Italy as a case study, we take advantage of quantified measure of damages for 75,424 buildings to estimate the negative supply shock and of a law issued to allocate reconstruction grants, which resulted in a sharp, exogenous discontinuity in transfers and output behavior across neighboring municipalities to estimate the positive demand shock. Diff-in-diff analysis suggests that local output multipliers of reconstruction grants (net of marginal tax rebates) are below unity. Yet the size of the grants act as a public insurance scheme, preventing a fall in output.
This record's DOI: https://doi.org/10.17863/CAM.4954
This record's URL: https://www.repository.cam.ac.uk/handle/1810/255207
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