The Central Italy earthquake and its short-term impact on firms

This paper evaluates the short-term impact of the earthquake that hit Central Italy in 2016 on firms’ economic activity. The analysis is based on corporate balance sheet data and on a methodology that compares the performance of firms located within the seismic area with firms featuring similar characteristics but located outside it. The results show that in 2016, firms within the seismic area experienced a negative effect on revenues of over 5 per cent with respect to the counterfactual group (corresponding to about 20 per cent in the last quarter of the year, when most of the tremors occurred). In 2017, the effects lessened overall. The analysis also shows that the effects were quite heterogeneous. The negative impact is considerable for firms closer to the epicentres (core area) in both years, in particular for firms of smaller size that operate in the service sector, owing to their reliance on local and tourism-related demand. For firms located further from the epicentres (non-core area), which include the main local firms and long-standing manufacturing specializations, the effects were somewhat smaller and vanished in 2017.