Growth at Risk from Natural Disasters
IMF Working Papers, September 17, 2021
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- Growth at Risk from Natural Disasters
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Bibliographic details
- Authors: Tamim Bayoumi, Saad N Quayyum, Sibabrata Das
- Published: September 17, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513597652.001
Methodology
- Uses quantile regressions and a growth-at-risk approach to analyze the impact of natural disasters on per-capita GDP growth.
- Focuses on the impact of disasters and policy choices on the distribution of growth rather than simply its average.
Key findings
- Countries with disaster preparedness mechanisms have lower probability of witnessing a significant drop in growth as a consequence of a natural disaster.
- Countries with lower public debt have lower probability of witnessing a significant drop in growth as a consequence of a natural disaster.
- The two policies—disaster preparedness and lower public debt—are complements; their effectiveness varies across different disaster scenarios.
- Both disaster preparedness and lower public debt 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 involve both policies.
Policy implications and recommendations
- Implement and maintain disaster preparedness mechanisms to reduce downside risk to per-capita GDP growth from natural disasters.
- Maintain lower public debt to preserve fiscal space, which is especially valuable when facing very large disasters.
- Adopt a balanced strategy combining disaster preparedness and fiscal prudence, recognizing the complementary nature of these policies across different disaster scenarios.
Tamim Bayoumi, Saad N Quayyum, and Sibabrata Das. "Growth at Risk from Natural Disasters", IMF Working Papers 2021, 234 (2021), September 17, 2021. DOI: https://doi.org/10.5089/9781513597652.001
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