The economic impact of extreme weather events through a Kaleckian–Post-Keynesian lens: A case study of the State of Queensland, Australia

Abstract

The economic impact of natural disasters has been neglected in the mainstream theories of development and economic growth. Only recently has a body of research into the economic effects of natural disasters begun to emerge. This recent research has taken into account the socio-economic impact of disasters, and has explored the influence of the pre-disaster socio-economic structure on the response to a disaster event when it occurs. However, a great deal of research fails to effectively examine this relationship within a general macroeconomic framework. In the absence of such attempts, this article aims to explore the dynamic effects of climatic disasters on key economic variables in the State of Queensland for the period of 2002 to 2011. The paper draws on the principles of a Kaleckian–Post-Keynesian multi-sectoral open economy theory, using powerful time series analysis and estimation techniques. Assuming natural disasters to be exogenous random shocks, this paper explores whether macroeconomic variables in the model differ significantly in their response to extreme climatic shocks.