REPLICATION STUDY: Toya and Skidmore (Economics Letters, 2007)
This study replicates the empirical findings of Toya and Skidmore (2007), hereinafter "TS", and performs a variety of robustness checks. We are able to exactly replicate the findings reported by TS. Our robustness checks consist of two parts. Firstly, we update TS's original data set, both with respect to variable values and years. We then address a number of estimation issues: (i) truncation bias, (ii) the effect of severe skewness in the disaster data, (iii) fixed effects, and (iv) the omission of a time trend. Our robustness checks produce two major results: We confirm TS's finding that income is negatively related to both fatalities and economic losses from disasters. In fact, we estimate coefficients that are substantially larger than TS. On the other hand, we find no evidence to indicate that the other economic development variables (educational attainment, size of government, economic openness, financial sector development) are statistically related to either fatalities or economic damages.