Italy's Earthquake Crisis
By: Tyler Johnson
In recent memory, it seems as if Italy has all of the large earthquakes. The latest, struck on Sunday, October 30, 2016, in central Italy. The earthquake, which had a magnitude of 6.5, caused even more significant damage to the towns around central Italy. Even though the earthquakes have caused considerate damage, the past and most recent earthquakes will affect the Italian economy little to none. 
When the earthquake struck over the weekend, some major historical buildings, like the Basilica of San Benedetto, were destroyed in the region. An earthquake of this magnitude, as well as the addition of three previous earthquakes this year, will cause prices of materials for rebuilding to go up. As the earthquake destroys buildings and homes, more materials are needed to rebuild and help the residents of the towns that got hit. This creates an increase in demand, causing prices of building materials to go up, as well as the quantity to go down.
Although there will be an increase in price of building materials, the costs won’t affect the Italian economy. The prime minister of Italy believes that Italy has sufficient natural resources within the country that the rebuilding costs will not cost the government lots of money, due to the current economic strength already within the Italian economy. Including to the economy being stable, another factor why the rebuilding costs shouldn't be high is because the elasticity of supply should be relatively elastic. This shows the price of the building materials shouldn't change a larger amount. when demand shifts.
Works Cited
"Italy Earthquake: 6.6-magnitude Tremor Rocks Nation's Center." CNN. Cable News Network, n.d. Web. 01 Nov. 2016.
Wells, Marc. "Another Major Earthquake Strikes Central Italy By Marc Wel." World Socialist Web Site. N.p., 31 Oct. 2016. Web. 1 Nov. 2016.
This is a very interesting article and topic because I never really thought about the economics of earthquakes. It is an interesting fact that when an earthquake hits that the price of the supplies to build buildings will increase. I think that the price increase in the materials to fix the buildings will effect the people of Italy because in order to fix their houses they will have to pay more for the materials than before since there will be a high demand for them.
ReplyDeleteI haven't looked much into this story myself, but still, while I was reading your post I was a little shocked by the fact that these earthquakes don't have a larger impact on the economy. But it made more sense when you added the fact that the prime minister believes the repairs for the historical buildings can be made using natural materials; they wouldn't be greatly effected economically because they already have the resources to make all repairs. That was honestly really interesting to learn about; all the natural resources they had to make any repairs on the buildings. That's something that I think is really important for any economy - to think about the natural resources you already have. If Italy didn't have the natural resources to rebuild their buildings, they would be in a worse economic situation. It is interesting to think about that while studying economics; we know that certain events and actions can change the supply and demand curve (like natural diasters) but we don't always talk about what happens when the country or specific firm we're talking about already has all the resources they need to balance out the graph and stop any real change to the economy from happening. But maybe I'm getting too ahead of myself, maybe we'll discuss that in a later unit. I just think it's an interesting concept to think about, and I wouldn't have thought of it if I hadn't have read your post.
ReplyDeleteWith the high costs of rebuilding cities, Italy seems to always do well when they are struck by this tradgety. With Italy having many old buildings, I am curious as to if its worth while for them to develop and utilize new technologies to help prevent earthquake damage, and what affects this would have on their historical culture and architecture.
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