Growth at Risk from Natural Disasters

Author/Editor:

Tamim Bayoumi ; Saad N Quayyum ; Sibabrata Das

Publication Date:

September 17, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

The paper analyzes the impact of natural disasters on per-capita GDP growth. Using a quantile regressions and growth-at-risk approach, the paper examines the impact of disasters and policy choices on the distribution of growth rather than simply its average. We find that countries that have in place disaster preparedness mechanisms and lower public debt have lower probability of witnessing a significant drop in growth as a consequence of a natural disaster, but our innovative methodology in this paper finds that the two policies are complements since their effectiveness vary across different disaster scenarios. While both are helpful for small to mid-size disasters, lower debt—and hence more fiscal space—is more beneficial in the face of very large disasters. A balanced strategy would thus involve both policies.

Series:

Working Paper No. 2021/234

Frequency:

regular

English

Publication Date:

September 17, 2021

ISBN/ISSN:

9781513597652/1018-5941

Stock No:

WPIEA2021234

Pages:

25

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