Craig R. Parsons is a professor of economics at Yokohama National University (YNU) in Japan. His research interests include international economics, international trade, exchange rate pass-through, new empirical industrial organization and studies of market power in oligopolistic markets. He holds a BA in Economics from Rutgers College, Rutgers University and a PhD in Economics from the University of Hawaii at Manoa. He has served as managing editor for the Asian Economic Journal and is very active in the East Asian Economic Association. He also serves as the director of the Joint Japan/World Bank Graduate Scholarship Program at YNU.
When a natural disaster wipes out an entire region's ports, airports and rail lines, production lines are massively disrupted. Alternative routes, sources, and logistics are sought out. But once infrastructure is restored, do original modes of production bounce back, or do some modes of behavior disappear forever from the region? What is the degree of "hysteresis", or stickiness, of production and trade disruption in the wake of a massive earthquake and tsunami as occurred in 2011 in Tohoku Japan? How long did it take for the Gulf states take to recover after the Mississippi river was clogged in the wake of Hurricane Katrina? Did some firms and activities leave, never to return? These are the questions I will examine for both the US and Japan with a detailed examination of commodity level trade data over the short and long run. In the field of economics, little attention has been given to the effects of disasters on trade. Furthermore, the few studies are only at a very aggregate level. My detailed study of two disasters will give me a much richer picture. The Great East Japan Earthquake (2011) and Hurricane Katrina (2005), offer a chance to examine two large catastrophes and conduct a detailed examination of their effects on imports and exports across sectors (energy, food, manufacturing inputs, export of consumption goods, etc.). Both with my use of detailed commodity level data over time and by utilizing different "structural break" econometric methods, I will be able to assess to whether "shocks" are permanent, or eventually, revert to historical norms. My use of detailed port level data will be also able to paint a much richer picture of shifts of trade within a country. The main databases to be used will be UN Comtrade, Japan Trade Statistics, and the US International Trade Commission trade database. I plan to travel to University of Southern Mississippi's Katrina Research Center as well as University of Colorado Boulder's Natural Hazards Center Library, which houses a unique "HazLit" database of research materials on disasters. The immediate research goals of this project will be several academic papers to be published in top refereed economic journals, though I also hope to contribute to the broader academic literature in disasters. This research agenda's results should be of interest to trade, but also international macroeconomists, as the findings will have implications for the future of US-Japan trade balances. As energy demand patterns will also be examined, this will have important findings for our understanding of the ability, or lack thereof, of switching to alternative energy sources. Lastly, as a comparative study of two disasters in Japan and the US, I will obtain insight into the responses by individuals, firms, and government, which will have similarities, but no doubt, many differences.