# Evaluating Dynamic, Regional, and Economic Impacts of the Tokai Earthquake

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## Abstract

Natural disasters result in economic losses. In this study, a dynamic spatial computable general equilibrium model is constructed to investigate the negative economic impacts of an earthquake. In our model, Japan is subdivided into 47 regions, which are all connected by transportation networks. The model is of a decentralized economy with utility-maximizing consumers and value-maximizing firms in a dynamic context. The model embodies both spatial and dynamic aspects, i.e., commodity flows among regions and the dynamics of regional investments. The model is calibrated for the 47 regions’ economies using a multi-regional input–output table for Japan. We estimate the impacts of a hypothetical earthquake, which is expected to occur in the near future, on the regional economy (taking the Tokai region of Japan as a case study). The simulation results show both dynamic and spatial economic impacts before and after an earthquake. This study suggests that the economic impacts of such a disaster should be evaluated based on both ex-ante and ex-post criteria.

## Keywords

Disaster protection Indirect economic impacts Tokai earthquake Dynamic spatial CGE modeling## Notes

### Acknowledgement

I would like to thank Y. Miyata for collaboration to the early stage of this work. This work was supported by JSPS KAKENHI Grant Number 16 K13141. This is also supported by Joint Usage and Research Center, Research Center for San-En-Nanshin Regional Collaboration, Aichi University.

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