Evidence from the 2009 L’Aquila earthquake shows the importance of public grants in stimulating output following an economic shock

In 2009, an earthquake struck the region of Abruzzo in Italy near L’Aquila, causing over 300 deaths and substantial damage to buildings. Francesco Porcelli and Riccardo Trezzi present findings on the economic impact of the earthquake, particularly in terms of the role of reconstruction grants which were allocated to affected areas. They note that not every area which suffered damage by the earthquake was allocated funding and that these grants proved essential in stimulating economic output following the disaster. The findings provide evidence that interventions through public funding can be vital in enabling areas to recover following an economic shock.