| Much of the work on the economics of disasters has focused on modeling physical and output losses after a disaster occurs. The examination of possible inflation that ensues after a disaster, however, has been very limited. The literature that has empirically studied post-disaster inflation have faced methodological issues or focused on a narrow set of markets. In particular, it is difficult to separate changes in price levels due to seasonal volatility and other economic variables from those changes that are the consequence of a disaster. This thesis explores the impact of disasters on prices, with a focus on hurricanes affecting the states of Florida, Georgia and Texas, through the use of "area wide factors" obtained by principal components analysis. It is concluded that hurricanes have definite lagged effects on inflation patterns, and difference in each states pattern of inflation are attributed to state-specific anti-gouging laws. |
