Macroeconomic impacts of the 2010 earthquake in Haiti

Abstract

In this paper we use the synthetic control method to estimate the macroeconomic losses from the 2010 earthquake in Haiti, one of the most severe natural disasters in the modern era. The macroeconomic effects of the earthquake were equal to an average loss of up to 12 percent of gross domestic product over the period 2010-2015. While surges in imports and foreign aid supported a temporary increase in aggregate consumption, aggregate investment and services-sector output experienced large contractions. The road transport sector was severely affected. Impacts on electricity use have been less pronounced. The data suggest that macroeconomic losses may be permanent. The earthquake is thus a case of an extreme natural disaster contributing to divergence in development outcomes.