Question

stock is destroyed because of a natural disaster or a war.
en
3. Determine the long-run effects of this on the quantity of capital per worker and on
output per worker.
b. In the short run, does aggregate outpul grow at a rate higher or lower than the growth
rate of the labour longer
c. After World War II. growth in real GDP in Germany and Japan was very high. How do
your results in parts (a) and (b) shed light on this historical experience?
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Answer 1

Answer:

During natural disasters, the stock index decreases on the day of the events and on the two subsequent days. Therefore, investors should short sell the index on the day of the disaster and hold it for 2 days.

Explanation:

this finding suggests that after a flood, damaged production capabilities are offset by increased investments in assets and increased labor. overall, these empirical studies suggest that the indirect effects of natural disasters significantly reduce economic growth, especially in low-income countries.