Evaluation of the Brumadinho disaster on economic performance in Minas Gerais

Abstract

This study aims to evaluate the effect of the Brumadinho disaster on economic performance in Minas Gerais. As for empirical strategy, contrafactual trajectories for Minas Gerais were elaborated in order to obtain the effect of this technological disaster. In addition to inserting serially lagged outcome variables, a methodological advance was achieved by including the spatially lagged outcome variable as well, in order to generate the counterfactual trajectories with the lowest mean squared prediction error (MSPE). The results reveal that the mining industry in the state of Minas Gerais was not affected by the Brumadinho disaster.

Keywords:
Brumadinho; technological disaster; synthetic control; spatial lags