Growth at Risk from Natural Disasters
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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
Subject:
Environment Fiscal policy Fiscal space Natural disasters Public debt
Frequency:
regular
English
Publication Date:
September 17, 2021
ISBN/ISSN:
9781513597652/1018-5941
Stock No:
WPIEA2021234
Pages:
25
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