Economic Impacts of an Unscheduled, Disruptive Event: A Miyazawa Multiplier Analysis

Abstract

The damages and losses from unscheduled events, such as earthquakes, flood, and other major natural disasters, have significant and intense impacts on a region’s economy. The demand for the estimation of the economic impacts of recovery and reconstruction as well as of damages per se may become immediate after such events. Most analytical models of urban and regional economies, however, cannot confront these unscheduled and significant changes, since, at best, they assume incremental changes in systems over time. The consequences associated with the event, moreover, will have many aspects including damages on demand and supply sides, for example, since the event may affect a wide range of regional activities in different ways. The difficulties with impact analysis of unscheduled events are, therefore, 1) disentangling the consequences stemming directly and indirectly from the event; 2) deriving possibly different assessments at each spatial level — cities, region, or nation — (Hewings and Mahidhara, 1996), and 3) evaluating the reaction of households which are poorly understood (West and Lenze, 1994).