TITLE:
Seeking a Better Recovery Process from Major Natural Disasters: A Lesson from Several Growth Models with Multiple Equilibria
AUTHORS:
Kei Hosoya
KEYWORDS:
2011 Great East Japan Earthquake and Tsunami, Growth Models, Multiple Equilibria
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.5,
August
24,
2017
ABSTRACT: Based on several existing growth models with multiple
steady states, this paper examines economic conditions that enable recovery from
major natural disasters. We focus on recovery from the 2011 Great East Japan Earthquake
and Tsunami. More concretely, we survey three recently released studies, which indicate
that the sense of direction for expectation formation has the potential to play
an important role in recovering from large natural disasters. We also find an inference
that the big-push development scenarios that traditionally appear in developing
economies have a low affinity with disaster reconstruction in developed countries.
After a discussion of these equilibrium selections,
this paper makes further reference to economic environments needed for a sustainable
recovery path toward a superior long-run, steady-state equilibrium. This
equilibrium allows interpreting the terminal of a series of recovery programs in
our context.