We investigate the regional economic consequences of a hypothetical catastrophic event-attack via radiological dispersal device (RDD)-centered on the downtown Los Angeles area. We distinguish two routes via which such an event might affect regional economic activity: (i) reduction in effective resource supply (the resource loss effect) and (ii) shifts in the perceptions of economic agents (the behavioral effect). The resource loss effect relates to the physical destructiveness of the event, while the behavioral effect relates to changes in fear and risk perception. Both affect the size of the regional economy. RDD detonation causes little capital damage and few casualties, but generates substantial short-run resource loss via business interruption. Changes in fear and risk perception increase the supply cost of resources to the affected region, while simultaneously reducing demand for goods produced in the region. We use results from a nationwide survey, tailored to our RDD scenario, to inform our model values for behavioral effects. Survey results, supplemented by findings from previous research on stigmatized asset values, suggest that in the region affected by the RDD, households may require higher wages, investors may require higher returns, and customers may require price discounts. We show that because behavioral effects may have lingering long-term deleterious impacts on both the supply-cost of resources to a region and willingness to pay for regional output, they can generate changes in regional gross domestic product (GDP) much greater than those generated by resource loss effects. Implications for policies that have the potential to mitigate these effects are discussed.

We analyse the economic risks from two influenza pandemics that represent extremes along the virulence‐infectiousness continuum of possible pandemics: a high virulence–low infectiousness event and a low virulence–high infectiousness event. Our analysis involves linking an epidemiological model and a quarterly computable general equilibrium model. We find that global economic activity is more strongly affected by a pandemic with high infection rates rather than high virulence rates, all else being equal. Regions with a higher degree of economic integration with the world economy face greater risks of negative effects than less integrated regions.

Bank in Vietnam. For their valuable inputs to our work, we thank Nguyen The Dung (the World Bank), and members of the project research consortium, especially Dao The Anh (Centre for Agrarian System Research and Development), Nguyen Ngoc Que and Do Anh Phong (Institute of Policy and Strategy for Agricultural and Rural Development), Vo Thi Thanh Loc, Le Canh Dung and their teams at the Mekong Development Institute. We thank Michael Jerie (Centre of Policy Studies) for helpful comments on the paper.

Regulators are requiring banks to raise additional equity to finance their activities. The benefits are understood in terms of reducing the risks of another financial crisis. But there are potential costs, including the potential for unanticipated macroeconomic impacts as banks reduce leverage. We use a financial computable general equilibrium model, containing disaggregated treatment of financial agents, to explore the economy‐wide consequences of an increase in bank capital adequacy ratios. We find that the macroeconomic consequences are small.

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