The macroeconomic consequences of natural disaster in Vietnam

The main purpose of this study is to investigate the macroeconomic consequences of natural disasters in Vietnam for the period from 1983 to 2009. Augmented Dickey-Fuller and Phillip-Perron unit root tests, Johansen and Juselius co integration test and causality test based on vector error c(!)ITection model (VECM) are used to examine the model. The empirical results showed that all the time series data are stationary at first difference and cointegrated with single vector. All the explanatory variables have found to contribute to the long run equilibrium relationship. In addition, natural disasters have a statistically adverse impact on the macro-economy. Increase in the total number of victim leads to corresponding decrease in the income level. Furthermore, the Granger I causality te~t results based on vector error correction model reveal that the government consumption and gross capital formation do not have causality relationships with total number ofaffected in the short-run. This study provides a better understanding to people of the impact of natural disaster on macro-economy in Vietnam