Natural Disasters and the Economy Term Paper by Master Researcher

Natural Disasters and the Economy
This paper explores the economic effects of natural disasters.
# 36076 | 900 words | 3 sources | MLA | 2002 | US
Published on Sep 22, 2003 in Economics (Macro) , Economics (General)

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This paper describes the macroeconomic effect a natural disaster would have on the nation. The paper finds that it would not necessarily affect the capital stock directly in the short term but its effect would be seen in the long term. The paper explains that in order to sustain a living condition of part of a region, the country needs to take out from its capital reserve to fulfill its nation's needs, and eventually this affects their capital stock.

Earthquake on Capital Accounts

From the Paper:

"However, in the long run, it is also affected because there is a high demand for goods that were depleted from the market. The authority will have to establish stronger trade relation in order to import shortened stocks for the country. In the long run the country will run into a shortage of capital stock because the government will have to take out its funds from capital stock for fulfilling its people's needs. [Tomblin, 1981]
"Higher consumption affect fixed capital assets as well. This is because after the disaster, most people will develop consumption for capital assets to rebuild their house. Half or more then half of this has to be born by the government because the people have fixated their income through government securities and investment. When such a condition prevails, government usually has to face a gradual decay of capital assets and monetary reserves.
"Capital stock, which is calculated fairly conservatively because its nature is long term, will have to take a different treatment, as it will have to reduce its life period. For this reason, it is considered to be depleting slowly when natural disaster strikes a country."

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