A natural economic experiment : An analysis of the macroeconomic consequenses of the Indian Ocean tsunami in Sri Lanka

Abstract: In this thesis we analyze the macroeconomic impact of the tsunami in 2004 on the Sri Lankan economy. The theoretical framework we use, the Australian model of a developing economy, gives direct or indirect predictions for the development of a number of variables after a natural disaster. In our case, we believe that the main reason for developments of the output variables and the exchange rate is the extraordinary large and rapid inflow of foreign aid money. In summary, we find the overall impact of the tsunami on the Sri Lankan economy to be minor.