A theory of disasters and long-run growth

Ken Ichi Akao, Hiroaki Sakamoto*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Citations (Scopus)


This paper develops a unified framework in which various types of catastrophic shocks can be simultaneously considered within a standard model of economic growth. We first establish the basic existence and equivalence results. We then apply the framework to an endogenous growth model to consider the influence of disasters on the long-term equilibrium and the transition phase. The result shows that while experiencing disasters may lower the average growth rate of the affected countries, there exist various channels through which the risk of disasters and long-term economic performance are positively correlated. This finding reconciles the apparently contradictory evidence in recent empirical studies.

Original languageEnglish
Pages (from-to)89-109
Number of pages21
JournalJournal of Economic Dynamics and Control
Publication statusPublished - 2018 Oct


  • Aggregate uncertainty
  • Disasters
  • Dynamic optimization
  • Endogenous growth
  • Long-term growth

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


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